Everyone knows what a credit score is, but why do we ignore the signs that we are ruining it?
Credit usually is a pretty safe barometer for creditors to measure just how well you’re doing with managing debt, and if you’re paying bills on time or you have too much debt as it relates to credit limits or debt to income ratio.
A lot of that plays into your credit score, but consider, despite all of those elements and how they play into it, that more than half of the population doesn’t pay much attention to their credit score.
The fact remains that the credit score only becomes a concern when you are turned down for a loan, line of credit or you’re being deterred in some way by a lender. And you can imagine the surprise when you see a sub 600 credit score and wonder just what happened or how quickly that number went from acceptable to unbelievably disappointing.
The truth is you’re ruining your credit score and probably assume it’s fine (if you’re not checking it regularly) and not even realizing just how low it’s gotten.
Paying attention to it is what separates the financially sound from those who are somewhat aloof when it comes to money, saving it and understanding just how quickly they’ve fallen off the financial grid.
How exactly are you ruining your credit?
First, and the most obvious, is you’re not paying your bills on time. That’s an easy one but yet escapes the masses. Every time you pay late or go longer than 30 days beyond a due date (this happens frequently with cars and homes mostly), you run the risk of not only ruining your credit but being turned in to a collection agency.
That debt to income ratio plays into that poor credit score, but you have to take a look at your debt ceiling when you reflect on your credit score. If you’re maxing out credit cards or you have a balance that is tiptoeing around the limit, you’re going to find that score starting to sag quite a bit.
Furthermore, you should not open lines of credit, one after another. That means don’t buy a car and a house at the same time, or start opening up credit cards (even for good reasons like balance transfers) one after another.
If you’re not paying a close eye on your credit score, how can you possibly make sure it’s not faltering? Once you get a grasp on it, then comes the easier part: doing right by that three digit score.
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