Avoid lowering your credit score

A bad credit score can keep you from buying a home, financing a car, sometimes even keep you from getting a job. But how do you prevent a low credit score? Do you even  know what lowers your credit score? Here are five common mistakes that can lower your credit score, and tips on how you can avoid them.

Making late payments – Even being one day late on a payment can lower your credit score, because lenders take it as a sign you might be unreliable.

Tip: Pay in full and on time, and if you can’t, pay at least the minimum on or before the due date.

Maxing out your credit card – Maxing out your credit card or being close to the max is called “over-utilization,” and makes your debt-to-credit ratio too high

Tip: Limit your balance to 30 percent or less of your credit limit.

Cancelling old credit cards –The length of your credit profile is based on the longest-held card or loan you’ve had. Creditors like borrowers with a long credit history because it helps give them a better idea of your habits and if you’re on time with payments.

Tip: Keep old credit cards, even if they’re not being used, and use them once in a while to keep your credit profile’s longevity intact.

Using cash instead of credit – While it might be a good financial practice, paying for everything in cash does nothing to improve your credit score.

Tip: Create good habits like paying with cash for necessities (utilities, groceries, etc.) and using credit for occasional “treats” like dining out or a new outfit.

Applying for more credit than you need – Every time you apply for a new card, you trigger a credit inquiry on your credit report. The more inquiries you have, the riskier you appear to creditors, and that can lower your credit score.

Tip: Only apply for credit cards when it is a necessity, or if financially, it makes sense.

For more information on credit ratings, investments, saving for retirement and investment scams, visit www.saveandinvest.org

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