The Top Credit Mistakes People Should be Aware of

Everyone does what they can in order to stay on top of his or her credit and they try to do this by paying bills on time, but not applying for new lines of credit but only when this becomes a necessity and by being conservative in regards to their spending habits. Establishing credit though is not as hard as many people think, yet when it comes to maintaining it, it can be quite difficult. Below you will find five of the mistakes people are still making (and should thus be avoided) in regards to their credit rating.

1. Closing credit card accounts

Many people who don't have a good credit history will instantly want to close all of their credit card accounts and then start saving as much money as possible. Yet this is not a good way to deal with such problems, because when you will close your credit card accounts, you'll make them inactive, so you will lose a big part of their influence and eventually fall of your report. Then you will notice that your credit history was already affected negatively which will decrease your success when applying for a loan.

The solution

You should envision your credit report as being your resume. If you have an impressive work history then I think you will not want it to disappear suddenly, after a certain amount of time, right? That is why the next step to take is to start paying your high balances while keeping at least three credit cards open so you have still credit card lines open.

2. Late or missing payments

You are already aware of this and if you want to maintain a good credit rating, you will need to make timely payments. You will also be surprised that if you are late with a payment, it will affect you very much.

Avoiding this

It's obvious you'll have to pay your bills on time and if you have a fixed salary, then I think you will have to define a clear budget for yourself. Get in touch with the creditors as well and discover when they'll report info to the credit bureaus. If you pay your accounts before they are reported you will make them look better on paper.

3. Numerous high balances

You need to always spend only as much as you need and when you do want to engage in a shopping spree, make sure you will be able to pay your bills on time.

The solution

If you spent too much than what you could afford then you should start with paying as much as you can from your debts per month as possible. Also, in the future don't spend too much and always have around ten percent of available balance.

As you can see, if you are not careful with the money you spend and the way you pay off your debts, you will never be able to improve your credit rating. By following these tips you will be able to improve your credit standing and have more chances of being approved for future credit!

This Guest Post was written by: Andrew Shultz

About the Author:
 Andrew Shultz is a freelance writer specializing in financial topics such as personal finance, mortgage, instantloans and debt management.

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