4 Ways to Ruin Your Credit

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ruincredit

shutterstock_117198814You applied for a new credit card, and you were approved! Whether you are a business or an individual, you may have the same impulse as others – go buy something! After all, there is must be something you need or want. However, if you are not careful, your spending ways can damage or even ruin your credit. Here are 4 ways you can ruin your credit so that you can avoid them:

Take out too much credit: Companies send you credit card offers and you need access to credit, so why not take it? After all, if a new card were a bad idea, then you wouldn’t have received the offers…right? Wrong. The more credit cards you apply for, the more inquiries you have on your credit report. This eventually negatively impacts your credit rating if too many inquires are made. Additionally, having access to more credit can lead to more spending – money you may not have.

Miss payments: You have bills, home responsibilities, job responsibilities, so maybe you forget to pay one of your credit cards occasionally. Remember that even the occasional missed payment hurts. Every time you miss a payment, that incident is recorded in your credit report. Anyone who looks at it evaluates how financially responsible you are and can then raise your interest rates, charge late fees, terminate a contract, or refuse credit when you need it.

Forget to monitor credit card spending: Once you or your employees have a credit card, don’t assume that all will be well. If you cannot track your spending or your employees’, then how will you know if you can afford the purchases or know when you are in financial trouble?

Give out your credit card details: You trust your spouse, your parents, or your employees, so keeping these details safe from trusted people seems unnecessary. But do you know how protective they are of this information? The more people who have access to your details, the easier it is for someone to steal your information and do financial damage at your expense.

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If you ruin your credit, it is very difficult to repair, but doing so is essential if you ever want to obtain a credit card in the future, improve your credit score, and become financially responsible for yourself and for future credit card and other loan issuers. So, once you are in trouble, what 4 things can you do?

Limit the credit cards you have: Take out only the credit that you need, and don’t be swayed by special offers, as they will end at some point. If you really do need more credit, research credit cards to identify the one that best matches your needs.

Pay off your debt: Regardless of how much you have, work steadily on paying down your debt. This allows you to rein in your spending; future lenders look kindly on this too.

Make regular payments: Always make payments every month, pay more than the minimum (the balance when possible), and monitor what is being spent.

Keep your details secure: Always keep financial information safe. Financial thieves are cunning; to ensure safety, minimize the number of people who can access your details.

When you need – or want – to buy something for your house or your business, make sure you can afford it. It’s easy to forget that your credit card represents money that you owe, but get into that mindset, as it will keep you in good stead. Be aware of the four ways you can ruin your credit so that you either avoid these traps or catch yourself before credit becomes a problem. If you have reached that point, start immediately to rectify the situation.

About the author: Kristen Gramigna is Chief Marketing Officer for BluePay, a provider of credit card processor. She brings more than 15 years of experience in the bankcard industry in direct sales, sales management, and marketing to the company and also serves on its Board of Directors.