Although no one would like to have poor credit, you can actually hurt your history without knowing it. If you’re a student and this it your first time to own an account, here are a few things you should avoid to prevent damaging your personal credit:
1.Submitting multiple applications to different companies. Are you aware that sending out way too many applications to different lenders and companies can terribly damage your credit score? Young people often receive numerous offers from student loan companies and credit card issuers so they are vulnerable to signing up multiple credit applications.
Remember that every time you experiment with credit applications, the creditor will check on your credit report. Credit inquiries will show in your file and too many inquiries from various lenders can send out a negative impression to a potential creditor. In fact, it can make you a “Risky” customer in the eyes of creditors and insurers.
2.Carrying a balance in your account. Contrary to what other people think, carrying a balance in your credit card accounts is not going to improve your credit rating. In reality, submitting only the minimum monthly due payment increases the risk of debt accumulation.
To maintain a good credit rating, do your best to pay your full balance each month. Doing this reduces the odds of accumulating credit card debt; saves you from extra credit card fees such as interest rate and late penalty costs; and frees up your credit limit.
3. Maximizing your borrowing limit. Despite the fact that your student credit card offers zero interest or a low rate, you need to keep your charges minimal (ideally, 40% or less). Understand that your credit-to-debt ratio is a standard aspect used in determining your FICO score. It comprises 10% of your FICO score.
4.Being late in making payments. Being late in posting your payments even only for a day can have a significant effect in your credit rating. This principle is applicable not only to your student credit card but to your other accounts as well.
If you are having problem submitting your payments on time or remembering your due dates, think about arranging automatic payment with your bank. Keep in mind that payment history comprises 35% of your total credit score.
5.Not reviewing your bills. Cautiously evaluating your monthly statements of account is definitely an essential step that must never be disregarded. If you discover any error in your credit bill, do not hesitate to dispute those charges.
Be sure to read all notices that comes from your issuer. The new CARD act requires all issuers to provide at least 45 days of advanced notice prior to making changes to their terms and conditions. If you do not check notices from your bank or card issuer, you might be surprised to learn that your rate of interest has already increased without your knowledge. By that time, you may have a more difficult time requesting for a change in your rate.
