The 10 Most Common Credit Sins and Mistakes

These common missteps can wreak havoc on your credit score, finances and access to loans. Here's how to avoid them.

5. Applying for too many cards

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Applying for a credit card generally results in the lender making what’s known as a “hard” inquiry into your credit. Hard inquiries are noted on your credit reports, and having too many can lower your credit score.

Additionally, filing too many applications for credit cards signals desperation to lenders.

6. Responding to offers in your mailbox

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It may be hard to pass up bonus points, miles or cash back offered to new customers of rewards credit cards. But understand this: Preapproved offers don’t guarantee that you’ll be approved. Think it over. You may not need that card. If you rarely leave town, for example, what good is a frequent-flier card?

7. Abruptly closing accounts

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Closing a credit card account — even if you’re doing so because it’s no longer useful to you — could negatively affect your credit score. That’s because closing an account affects your credit utilization ratio. (That’s how the amount you owe compares to the amount of credit is available to you.)

Additionally, closing an account doesn’t make it disappear. You’re still liable for any outstanding balance, and closed accounts can remain on your credit reports for years. Exactly how long a closed account remains on your reports depend on the payment history of the account, according to Equifax.

For more on the topic, check out “Ask Stacy: Should I Cancel My Credit Card?

8. Ignoring statements

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Like your credit report, your bank and credit card statements may have mistakes, whether from human error or fraud. But if you don’t open and read those statements, you’ll never spot the problems.

It’s a good practice to examine your account activity weekly to catch any problems early.

9. Applying based solely on a promotional offer

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It seems like every time I’m in a department store, the clerk at the register squeezes in a sales pitch about some irresistible store credit card offer. I politely decline, but I’m thinking, “Receiving a measly 15 percent off my purchase does not make up for all of the high interest and fees that come with these cards.” In other words, the costs outweigh the benefits.

I’m not suggesting that you refrain from signing up for a card that will actually be of major benefit to your family, such as through travel perks or cash back. Just be sure that the annual fee won’t swallow up all the perks. And if you carry a balance on a rewards card, the higher interest rates these cards generally have will nullify the benefits.

10. Failing to read the fine print

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When you apply for a credit card, you are agreeing to take full responsibility for any legitimate charges made with the card. So, you can’t afford to ignore the disclosures.

Fortunately, even if you make a few mistakes along the way, credit can always be repaired over time. Check out our credit restoration page for help with that.

What lessons have you learned using credit cards? Share with us in comments below or on our Facebook page.

Marilyn Lewis and Kari Huus contributed to this post.

Allison Martin
Allison Martin @amthewriter
After spending years as a governmental accountant, I decided to transition into the world of freelance writing. When I'm not busy writing, I enjoy mentoring mommy-preneurs and helping others manage their finances. ... More

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