7 Easy Ways To Ruin Your Credit
Some the biggest financial mistakes I made were when I was in my 20’s and 30’ that set me on the road to financial disaster. I was young and dumb and I had a good paying job, credit was no problem. I was receiving credit cards daily in the mail so it was no big deal filling my wallet with these cards. If I wanted something I would go out and purchase it or if I did not have the cash I had the plastic card to pay for the item.
After I matured and received a job handling loans for lenders I got a great education in how credit and loans worked. There are many items that will affect your credit, there are a few things that can have a positive effect on your credit score but there many things that have a negative effect and many things that you have no control over.
Having Good Credit
In today’s world your credit is so important. I am an employer for a large service based company and one of the hiring criteria is having good credit. We will take an application that looks good and if the person has bad credit we will not hire the person. This is just one issue that can hinder your life if you have bad credit. Many things in life revolve around your credit score, one would be amazed at how your life is judge by just your credit score.
There are many things that affect your credit score. Let’s take a little walk down the path and take a look at a few of these simple things that will ruin your life when it comes to your credit score.
Too many credit cards
Everybody is giving away credit cards, these cards are a huge money maker for companies. The last time I was at my dentist and took my dog to the vet they both were trying to get me to take out a credit card with them. Any department store, home improvement store, airlines you fly on and etc have credit cards that they want you to sign up for. Before you sign up for these cards read all the fine print on the contracts. Also take some time and do some research, some of these cards offer some great point reward programs.
Remember that every card you apply for is a loan program. When you apply for these cards your credit report is run and it is scrutinized which affects your credit score. Every ding against your credit drives down your credit score.
Pay your credit card payment on time
While we are on the subject of credit cards remember you MUST pay your credit card payment on time. Do not miss a payment even if it is a one off and say I will pay it next month. If you do this you will be charged a expensive late fee, plus you will rack up more interest. But what is worse is that your credit score will take a major hit and it will show all the times that you made late payments.
Read your email and open all your mail
This just happened last night to my wife and I, my wife was scanning her email and found that our cell phone invoice was due the These companies are saving on postage and administrative fees by sending the invoices by email. If you were to be late with your cell phone bill or utility payments this may show up on credit score and possibly lower your score. Make sure you read all your mail and catch those bills that come in a plain white envelope, read all your email and junk email because with technology these days your bill may be sitting in your email box.
Cosigning for a loan
I highly frown at people that co-sign for loans. First if the person is needing a loan cosigned for then they probably have bad credit for not paying their bills on time. If your child is needing a loan for a car and they have no money for a large down payment then I would wait and make them save their money until they have a good enough down payment for a car loan where they do not need me to cosign for it. I have two daughters that I have turned down cosigning for loans for them, they both have bad credit and it is due to the fact that they cannot manage their finances. It may sound bad, but I am not going to ruin my credit because they cannot manage what they have.
Getting buried in debt
It is getting easy again to finance just about anything. Home and car loans are flying out the door again and money is being lent to people are such cheap rates. Although you may qualify for a home loan and it is not in your budget don’t go out and purchase a home that you know will not fit into your monthly budget. If your debt to income ratio are not inline this will affect your credit very negatively. This negative score will stay with you until you have paid down some of the debt and get your income to debt ratio straightened out.
Large ticket purchases
If you are in the process of purchasing a home while the loan is being processed by the lending institution do not purchase anything on credit until you have closed on the home. Many people while purchasing a home will go and purchase all new furniture and supplies for the home on credit which will have a terrible effect on your credit score. If the hit on your credit score is bad enough you may lose out on the loan for the home. Be extremely careful if you are having a large loan processed, there are many things that can affect the loan, do not add to it with materialistic purchases.