5 Fumbles That Can Seriously Mess With Your Credit

When it comes to credit, it pays to sweat the small stuff.

Hate to break it to you, but when it comes to your credit, it pays to sweat the small stuff.

That’s because a first fumble can leave a big old blemish on your credit report. And seemingly small missteps can really swing your scores in the wrong direction. Plus, under federal law, negative information can stay on your credit file for up to seven years — 10 years if we’re talking bankruptcy (you can learn more here on how long stuff stays on your credit reports)— and thanks to the agreements most creditors have with the credit bureaus, it can be hard to get certain line items removed ahead of schedule.

But knowledge is power. So, with that in mind, here are five fumbles you should avoid so you don’t seriously damage your credit score.

1. Taking Your Good Credit for Granted

It’s very easy to turn a blind eye to your credit scores, especially if you were at an 850 last time you checked and aren’t looking for any new loans. But it’s important to check your credit reports regularly since errors can crop up unexpectedly. (Here’s what to do if you find one.) Plus, there could be legitimate line items you weren’t aware of (ahem, medical bill) that’ll need addressing.

You can keep an eye on your credit by viewing your free credit report snapshot, updated every 14 days, on Credit.com. You can also pull your credit reports for free each year at AnnualCreditReport.com. If you find your credit score needs improving, consider paying down any high credit card balances, addressing any delinquent accounts and limiting new credit applications until those numbers rebound.

2. Missing Just One Loan Payment

We’ve said it before, but given how important payment history is to credit scores, we’re going to say it again: A first missed loan payment can cause a good credit score to fall by up to 110 points and an average score to fall by up to 80 points. That’s why you’ll want to set up alerts or automatic payments for those monthly bills and, if you do accidentally miss a payment, give your lender a call ASAP. They may be willing to forgive the fumble “this one time.” (P.S. See if they’ll let you skip the late fee, too. Most issuers will accommodate previously perfect customers.)

3. Your Recent Shopping Spree

Retail therapy isn’t going to help your credit much if you charge all those purchases to your credit card — particularly if you can’t even come close to paying them off anytime soon. Credit utilization is the second-most-important factor of credit scores, and, if you’re using more than 10% to 30% of your total available credit limit(s), you can expect your credit scores to take a hit. Keep in mind, too, that credit card interest can quickly accumulate, and the higher your balances climb, the bigger that hit will be.

Be sure to keep your credit card charges to a minimum. And, if you do rack up a big bill, be sure to come up with a solid plan to pay it off. Strategies for getting rid of credit card debt include prioritizing payments (usually by smallest balance or highest annual percentage rate), drafting a new budget to find funds you can put toward your debts or looking into a balance-transfer credit card or debt consolidation loan.

4. An Unpaid Medical Bill

We know. Medical bills are the worst. Half the time you don’t know you have one and the rest of the time, the cost can be hard to cover. But leave any medical bill unattended long enough and it could wind up going to collections — which can end up on your credit reports and do big damage to your credit scores. The same goes, incidentally, for unpaid parking tickets, lapsed gym memberships and even outstanding library fines, so be sure to keep a close eye on your mail. And, if you get an unexpected bill, see if you can negotiate with the creditor or collector before they report it late on your credit reports.

5. That Boatload of Credit Card Applications You Just Filled Out

Sure, credit card churning sounds great in theory. Just think of all those points you can readily rack up. But each credit card application likely generates a hard inquiry on your credit report — and while each one should only cost you a few points, a whole bunch of inquiries in a short time span can really add up. Plus, points aside, the mere presence of too many inquiries can lead to a loan denial. Lenders see it as a sign of money troubles to come, meaning you’ll want to apply for credit cards (and those all-too-alluring signup bonuses) carefully.

Image: Geber86

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4 Mistakes People Make With Their Credit During the Winter

Here are some common credit mistakes people make during the winter.

No matter what seasonal holidays your family celebrates, we’re definitely in the festive season right now — it tends to start with Halloween and ends on January 1.

Over the last month or so, we’ve filled our pantries for Thanksgiving, hit the stores for Black Friday, and stocked up on gifts and food for Christmas or other family celebrations. (Not to mention all the pageants, concerts, get-togethers and parties that come with the season.)

During this time of year, many people get focused on gift giving and accidentally make these four credit mistakes, As we head into the home stretch, here are some not-so-smart spending behaviors to flag.

1. Overspending

‘Tis the season for giving, but some people give so much that they hurt themselves financially by spending more on their credit cards than they can pay back. That $25 gift for a friend that you thought you were getting a good deal on can suddenly cost $40 (or more!) once interest and fees are added onto an unpaid credit card. So be sure in these last few shopping days to stick to your budget. It’s okay to put things on your credit card … as long as you can pay off your credit card right away. (You can see how your holiday shopping has affected your credit by viewing two of your credit scores, updated every 14 days, for free on Credit.com.)

2. Not Watching for Fraud

There’s a lot of shopping this time of year – it starts with Halloween candy and costumes for the kids and ends with champagne for a New Years Eve celebration (and maybe a gym membership to go along with your 2017 resolution). Along the way, you’ve probably had your credit card in hand fairly often – shopping for a turkey for Thanksgiving or angling for a great deal on Black Friday or Boxing Day. With all that extra credit card use, it’s important to stay vigilant and monitor your credit card statements carefully for fraudulent charges. Also, be sure to report them to your issuer immediately to have the charges reversed and your card replaced.

3. Lending a Credit Card

If your spouse is running out to pick up some last-minute fixings for the annual family get-together, or maybe some stocking stuffers for the kids, it might be tempting to hand off your credit card to them if they don’t have their own. However, this common mistake can prove costly for so many people every year, because while your family member might be very trustworthy, a simple mistake of leaving behind a credit card they’re not used to carrying could lead to fraud. (Something else that’s important to note: Lending your credit card to someone else, though it isn’t illegal, could put you in violation of your card agreement and make it harder to reverse the charges made while the plastic was out of your hands. You can learn more about how this works here.)

4. Putting Your Credit Review on Hold

I always recommend reviewing your credit report at least twice a year — or even quarterly. But this season can be so busy that people will often put their good habits and responsibilities on hold so they can focus on the turkey, decorations, costumes and shopping that needs to be done. However, skipping a credit report check just once a year (especially during the holidays) can set you back dramatically and make it that much harder to check and clean up your report in the spring. (Remember, you can pull your credit reports for free each year at AnnualCreditReport.com.)

Image: svetikd

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