When it comes to understanding your credit, it can feel as complicated as trying to solve a Rubik’s cube. Frustrated by this confusion, many consumers neglect their credit, which can have a devastating impact on their financial futures.
A Consumer Action study recently revealed that 27% of Americans have never checked their credit report. That’s alarming, because it’s estimated that a large number of consumers have errors on their credit reports that could damage their credit.
Here are three things that could be hurting your credit:
1. Wrong Information
The wrong personal information on your credit report could hurt your credit. This could be things like your name misspelled, your incorrect home address, where you’ve worked in the past or even your Social Security Number listed incorrectly. How does a wrong address hurt your credit? Your information may be mixed up with someone else’s, especially if you have a common name, or are a “Jr.” or “Sr.” Or it could indicate identity theft — and that could really wreak havoc with your credit. By reviewing your credit report, you’ll be able to quickly see if there’s any information that needs to be updated or changed.
2. High Balances Compared to Limits
Another sneaky thing that could hurt you is your credit card balances — even those you pay in full. How can a credit card that you pay off hurt your credit? Issuers typically report your balances as of the statement closing date. But then those cards aren’t due until about a month later. So in the meantime, the balance on your reports may look high in comparison to your credit limits.
Generally you want the balance on each card to stay below 20 to 25% of your available credit. If you have a retail card with a small limit or a rewards card that you use to pay for everything to earn points, then this factor could come back to haunt you.
So you need to either pay your charges off before the statement closing date or ask for a higher credit limit. Of course, a higher credit limit should not be an invitation to overspend. You won’t improve your credit scores if you get in over your head with debt!
3. Outstanding or Delinquent Bills
The third sneaky thing that could hurt your credit score could be outstanding or delinquent bills. You’ll want to make sure you check your credit report to make sure that you have no outstanding bills or any delinquent bills that you need to get addressed.
Review your credit report and make sure you’re not being marked for anything delinquent that could be damaging your credit. This could be things like former gym memberships, old credit cards, or even medical bills.
*Article Source Courtesy of Jeff Rose of Daily Finance Online