Whether you’ve struggled with borrowing in the past and want to rebuild or you don’t have much history of borrowing at all, it’s a good idea to make sure your credit score is as good as it can be. There are a number of common mistakes people make that can harm their credit score, yet which many don’t realise will have any effect on their score at all.
The Credit Card Mistake
One common situation is this; you regularly take out credit cards. You use them responsibly, or perhaps just use them for the odd small purchase in order to help improve or rebuild your credit history. Naturally, you take advantage of introductory 0% interest offers. When the 0% period expires, you take out a new card with a new 0% period and chuck the old card aside never to be used again.
This is all well and good, but the mistake comes from simply chucking the old cards aside. This is commonly done, because people think if they simply don’t use the card they don’t need to worry about it. When someone looks at your credit report, though, this makes it look like you are struggling to manage your borrowing and are juggling multiple cards in your name. Make sure you actually cancel the old card when you get the new one.
The Problem With Bills
Not everyone is super-organised and everybody’s entitled to be a little bit scatterbrained from time to time, especially when they have a lot on their plate. This leads to another common situation. Supposing you’ve never gotten around to setting up a direct debit for your bill payments (though it is probably a good idea to do so anyway) and sometimes you forget about the bills until you get a notice saying they are overdue. But you always pay immediately when you realise your mistake and you aren’t charged any extra, so surely there’s no harm done is there?
What a lot of people don’t realise is that bill payments – or rather failure to make bill payments on time – will appear on your credit report. When lenders see it, they will think you are generally having trouble managing your finances and that, if you don’t always pay your bills on time, you will probably not make credit repayments on time either. This is not good news for your credit score. For this reason, you should always make sure you pay your bills on time. The easiest way to do so is to get around to setting up those direct debits.
