Increasing credit card limits. Beware! Credit card companies say they are rewarding your credit history by increasing your credit limit. This leaves you exposed to use your credit more and increase you debt. To refuse this increase of line of credit simply write or call the credit card company and refuse the increase.
Not knowing your interest rates and fees. Be sure you take the time to find out your interest rates and annual fees. (Fact, did you know that about 85% of you minimum monthly payment is interest). If you have high interest rates call the credit institution to see if you qualify for a lower interest rate promotion. If not shop around for a lower rate. You would not want to buy a $300 pair of shoes if you can shop around for the same jeans at another store for $100.
Not taking pride in your credit. Good credit is a valuable negotiation tool when you make large purchases such as a home, car, or home furniture. Challenged credit may slow down or stop you from buying such necessities. Try to budget you short and long term debt so you may increase your Credit scores.
Lengthening installment loans to get lower payments. This payment schedule lowers your installment payments but increases the amount of interest you pay over time. Thus, increasing the amount of overall payments over longer period of time. Try to pay installment loans in as short period of time and pay less interest. Be sure to budget your self accordingly.
Changing your credit card to Gold or Platinum. Most companies charge an annual fee for these higher status cards. Typically, $50 – $100 per year. Try turning these cards down and keep the use of you credit card for basic needs.
Never co-sign. When you co-sign you are not only responsible for your self, you are responsible for the other person you co-signed for. It also increase your income debt ratio which may count against you if you apply for a car or home loan.
Contact your lending institutions if you change your address and/or status. When you get married or divorced make sure you change your legal status. If you move update you information with the creditors and the major credit bureaus.
Minimum Purchase Rule. A lot of stores require a minimum purchase per transaction. This leaves the temptation to spend more money when you do not have to. Avoid putting yourself in this situation and avoid the credit card companies that also enforce these rules.
How Mistakes Are Made
When a credit report contains errors, it is often because the report is incomplete, or contains information about someone else. This typically happens because
- The person applied for credit under different names (Robert Smith, Bob Smith, etc.).
- Someone made a clerical error in reading or entering name or address information from a hand-written application.
- The person gave an inaccurate Social Security number, or the lender misread it.
- Loan or credit card payments were inadvertently applied to the wrong account or the wrong person.
- Auto Loan
