Trying to maintain and achieve a great credit score is, in many ways, similar to reaching and maintaining a healthy weight. While some people find it easy, others find it next to impossible.

Both goals require consistent effort, hard work, and no cheating. And when you finally achieve a credit score of 750, it doesn’t mean you can sit back and relax. Even the most credit-savvy of us can make a money management mistake—and that’s all it takes for your credit score to go tumbling back down.

And once your credit score falls below a certain point, it can be quite difficult to pick it back up. That’s why it isn’t surprising that around 68 million Americans had a poor credit score of below 601 in 2015.

Here are three mistakes you should avoid before they cause major damage to your credit score.

In today’s digital era, where information is readily available at our fingertips, it’s crucial to make informed decisions when it comes to our financial health. One aspect that holds significant weight in our financial journey is our credit score. A good credit score opens doors to favorable interest rates, loan approvals, and various financial opportunities. However, there are common credit mistakes that can hinder our progress and impact our creditworthiness. In this article, we will explore three credit mistakes to avoid, empowering you to take control of your financial future.

  1. Late Payments: The Silent Credit Killer

Paying your bills on time may seem like an obvious practice, yet many individuals overlook its importance. Late payments can have a detrimental impact on your credit score and financial well-being. Lenders and credit bureaus closely monitor payment history, and even a single missed payment can cause significant damage. It’s crucial to prioritize timely payments for all your financial obligations, including credit cards, loans, and utilities. Set up automatic payments or use reminders to ensure you never miss a due date.

  1. High Credit Utilization: Balancing Act for Financial Success

Credit utilization refers to the percentage of available credit that you are currently using. Maintaining a high credit utilization ratio can signal financial instability and may raise concerns for lenders. It is generally recommended to keep your credit utilization below 30%. For example, if your credit limit is $10,000, it’s advisable to keep your outstanding balance below $3,000. By doing so, you demonstrate responsible credit management, which positively impacts your credit score. Regularly monitor your credit card balances and strive to keep them in check to avoid this common credit mistake.

  1. Closing Old Credit Accounts: The Longevity Advantage

Contrary to popular belief, closing old credit accounts can negatively impact your credit score. The length of your credit history plays a crucial role in determining your creditworthiness. Older accounts demonstrate your ability to manage credit responsibly over an extended period. When you close an old credit account, you essentially shorten your credit history, potentially lowering your credit score. Instead of closing these accounts, consider keeping them open with occasional small transactions to keep them active and maintain a positive credit history.

Conclusion

Your credit score is a reflection of your financial responsibility, and avoiding common credit mistakes is essential for a healthy financial future. By prioritizing timely payments, maintaining a low credit utilization ratio, and preserving old credit accounts, you can boost your creditworthiness and unlock various financial opportunities.

Remember, building and maintaining good credit is a long-term endeavor. It requires discipline, responsible financial habits, and a thorough understanding of credit management. By avoiding these three credit mistakes, you are taking a proactive step towards securing a brighter financial future.

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