Credit Mistakes That May Be Costing You Money

Even if you’re generally good about keeping track of your credit score and credit utilization ratio, there may be a few credit mistakes costing you money. By understanding these mistakes and how to avoid them, you can keep more money in your pocket each month. So, whether you’re just getting started with building your credit or looking for ways to improve it, make sure to avoid these common credit mistakes listed by GE Credit Solutions.

Money Costing Credit Mistakes

Mistake 1: Not Reviewing Your Credit Report Regularly

Your credit report is a critical factor in determining your credit score. This report has information on your credit history, including any late or missed payments, outstanding debt, and more. Regularly reviewing your credit report can catch any mistakes early on and dispute them if necessary. Additionally, this will help you keep tabs on your overall credit health and identify areas that need improvement.

Mistake 2: Carrying a High Balance on Your Credit Cards

Your credit utilization ratio, or the amount of available credit you’re using compared to your total credit limit, is another crucial factor in determining your credit score. Ideally, you want to keep your ratio below 30%, but the lower, the better. So, if you’ve a credit limit of $5,000 and a balance of $2,500, your credit utilization ratio would be 50%.

Carrying a significant balance on your credit cards hurts your credit score and can also cost you interest charges. If you’re struggling to pay down your balances, consider transferring your debt to a 0% APR credit card or consolidating your debts into a personal loan with a lower interest rate.

Mistake 3: Closing Old Credit Cards

It may seem counterintuitive, but closing an unused credit card can hurt your credit score. That’s because one factor in your credit score is the length of your credit history, and closing an old account can shrink your credit history.

If you have an unused card with a high annual fee, it may make sense to close the account to save money. But if you’re holding a balance on the card or if the card has a low-interest rate, it’s usually better to keep the card open and just cut up the physical card, so you’re not tempted to use it.

Mistake 4: Not Checking Your Credit Report for Errors

Your credit report is a detailed record of your credit history, and it’s essential to check it regularly for errors. As per a study by the Federal Trade Commission, one in five consumers had an error on their credit report that could lead to them paying more for loans and insurance.

If you find an error on your credit report, you can dispute it with the credit bureau and have it removed. This can be time-consuming, but ensuring your credit report is accurate is worth it.

Here’s How GE Credit Solutions Can Help!

GE Credit Solutions serving the Arlington area is here to help you improve your credit score. Our experts understand the credit scoring process and can help you correct any errors in your report. We also offer various other services to help you get on the right track financially. Contact us to learn more or get a free consultation today!