Common Credit Issues and How to Avoid Them

When looking to build up your credit score, you may have read how-to blogs that provide you with overnight solutions. While there are professional resources you can use to help you with this process, you may be surprised to learn there are many sources out there that offer false information. Believing everything you read about credit scores can lead you to use repair tactics that will do more harm than good to your score. By understanding all the ways your credit score can be negatively affected, you will have an easier time repairing it. Here are some common ways your credit score can be hurt:

Using your card too much
Having a credit card can be a great way to help you pay for things, but if you are not careful, you could see yourself sink into debt pretty quickly. Some card users are not aware that credit is not another form of cash. Credit is a loan from a financial institution that you will eventually have to pay back. By not being aware of this, you run the risk of overspending and falling into debt.

The best way to avoid this situation is to curb your spending as much as possible. You don't want to completely stop using your credit card, but if you create a budget and have a little self control, you can improve the state of your debt.

Avoiding a savings account
You never know what your financial future is going to hold, which is why it is important to prepare for the worst. If you commit to maintaining a savings fund, you will have an easier time in case any future financial hardships occur, like if your car breaks down or you lose your job.

You can begin an emergency fund in several different ways. One of the most common is to find out your take-home pay, factor in your expenses and then put your remaining paycheck into your savings. Find an amount that you can consistently deposit. While you are contributing to a savings account, be sure to only use its funds for emergencies. Using your entire emergency fund to pay off your credit card balance may help you get out of debt, but you are sacrificing your future for a quick fix.

Opening new accounts
While you are looking to repair your credit score, don't open any new accounts. Some debts may be necessary, such as student loans or mortgages, but you should try to avoid any installment loans for a major investment like electronics, furniture or even a car at this time. If you need to get one of these loans, take a hard look at your budget and be sure you can afford it before taking an extra debt on.

Forgetting to make credit card payments
If you consider yourself a procrastinator, you may have some trouble repairing your credit score. Making payments on time is the best way you can improve your credit score, but if you forget about these, you will see your score drop very quickly. You will also be charged a late fee, which can make it a bit more difficult to deal with this debt.

If you have had trouble making timely payments, try setting up a calendar reminder on your computer or post a note on your desk. Every little thing will help in this situation.