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of that capability who miss a payment should know that it generally takes 30 days for a missed payment to affect a credit score.
If you simply forget to make a payment, Equifax ® indicates that some lenders and creditors may not even report a missed payment if a full payment is made within 30 days of the initial due date. If you missed a payment because you can’ t afford to pay off the balance, then chances are you’ re committing another common misstep.
• Overreliance on credit: Utilizing credit too much is another common mistake that can quickly land consumers in debt. Resist using credit to finance unnecessary expenditures, like dining out or a night of entertainment.
Only use credit to make
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purchases you know you can afford to pay off in full come your monthly due date. Credit utilization ratio is another metric used to determine credit score, and it refers to the percentage of your overall credit availability you use each month. The financial experts at Chase suggest a good credit utilization ratio is 30 percent |
or less. If you’ re routinely maxing out your credit card( s) and can’ t afford to pay the balance in full each month, then your utilization ratio might be around 100 percent and might even be higher once interest charges are factored in. A high balance on an existing card too often compels young consumers to make another |
costly misstep.
• Opening too many credit accounts: It’ s hard to turn down what feels like“ free” money, and many consumers new to credit might open new credit cards, particularly if a current account has a high balance. Too many credit cards can land consumers in considerable amounts of debt. Equifax ® notes it’ s generally recommended that consumers have no more than three credit cards, but some consumers who struggle to make payments each month might be better off with just one card.
Some common missteps can make it easy to fall into credit card debt, which can adversely affect consumers’ credit scores. Avoiding those missteps can set borrowers up for a lifetime of financial freedom.
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