5 On Your Side: Costly credit mistakes - and 5 simple ways to improve your credit score
Posted August 21, 2020 1:34 p.m. EDT
Updated August 21, 2020 5:53 p.m. EDT
For too many North Carolinians, finances got really tight when the Pandemic hit. More than ever, it's important for families to protect their credit scores, which will continue to have lasting impact on their lives for years to come.
Credit scores will impact whether or not you get a loan, or how much interest you'll pay. It can impact where you get to live in the future – and even be judged by potential employers.
Unfortunately, many people are unknowingly making choices that negatively impact their credit score.
5 On Your Side’s Monica Laliberte put together a list of five common mistakes to watch out for when protecting your credit score – particularly during the pandemic.
1. Don’t cancel a credit card to specifically to improve your score.
Canceling a credit card lowers the amount of unused credit you have available. Lenders may see that as a risk.
2. Don’t ignore bills.
This can feel tempting with money gets tight, and especially if the pandemic has impacted your employment. But never let bills "just sit there." Call up the company you owe money to and work out a payment plan. Simple communication could save your credit score.
3. Don’t carry a credit card balance.
Use credit cards to buy only what you can pay off each month. This can be the difference between good and bad credit. If you pay your card balance each month, you build a solid credit foundation and prove your reliability. If you leave a balance hanging, you could lower your score.
4. Pay bills on time!
Late fees add up, and late payments lower your score! At least pay the minimum due. If payment is simply impossible, remember: Call the company and work out an arrangement.
5. Don't buy things you can't afford
The number one financial mistake people are making right now: Buying things they can't afford. This really impacts your credit score by adding to your debt. Instead, save up for the purchases you really want, and it'll feel rewarding when you're able to finally afford it.
Does age make an impact?
According to research from Bank Rate, there are generational impacts on financial decisions.
Baby boomers, those age 56-74, were the least likely to make these financial mistakes. Millennials were more likely to do so. Gen Xers, those age 41-55, were in the middle.
But you don't have to fall into the mold. With these tips, any age group can begin working towards good credit.