On the continuum of mistakes we make throughout our lives, there are definitely some screw-ups that are much worse than others. Forgetting to floss a couple of times a week? No big deal. Accidentally sending a snarky email about your boss to the whole office when it was intended just for your friend? Pretty big deal.
This same principle is true when it comes to your cash: there are some money mistakes that have a much more serious impact on your financial health (as measured by your credit score) than others. In fact, many people are surprised to learn just how much certain bad money habits are affecting their credit…and end up getting seriously burned by just a few financial flubs.
In a perfect world we’d all be keeping up with every aspect of our finances all the time, but since most of us live in the real world it’s important to understand which financial mistakes are particularly damaging so that we can be sure to avoid them, so take a look at the three common money missteps that will have a huge – and negative – impact on your credit score:
Paying Bills Late
The largest portion of your credit score – 35% - is determined by your history with paying your bills on time. Paying a bill late every now and then might not seem like a big deal, but the effects of your procrastination can really add up over time. If you’re interested in protecting your credit score, the most important thing you can do is make sure your bills are paid on time and in full. So get organized – no excuses!
Charging Up Your Credit Cards
The second largest portion of your credit score – 30% - is determined by the amount of debt you have, so charging up your credit cards is a seriously silly move. Credit cards are particularly dangerous because it’s so easy to rack up charges quickly, so be very careful to keep your spending under control. Also, if you have high levels of debt, make it a priority to get it paid off; this will serve to boost your credit score quickly.
Failing To Establish A Credit History
A lot of people worry about getting into trouble with credit cards or other loans, so they avoid taking on any type of credit account altogether. While this may seem like an easy way to keep your financial life in order, it will actually hurt you in the long run to fail to establish a credit history. Fifteen percent of your credit score is determined by the length of your credit history, so getting a late start is hard to recover from. Take on some credit and use it responsibly to keep your credit score in tip-top shape.
The good news about most mistakes is that they’re fixable, so if you’ve committed one of the big money no-nos listed above, it’s not too late to undo it. Get committed to improving your credit score today by making the three money mess-ups above a thing of your past!