3 Things Preventing You From Having Better Credit

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KEY POINTS

  • Poor credit could make it difficult to borrow affordably when you need to.
  • These behaviors may be lending to poor credit without you even realizing it.
  • Even just one large expense might throw off your credit.


Want better credit? Here's how to start.

If your credit score has seen better days, it may be holding you back in more ways than one. A not-so-great credit score could cause you to be denied a credit card, mortgage, or even a home to rent. And so it's important to work on boosting your score.

But sometimes, certain behaviors could lead to credit score issues. Here are three such actions -- or inactions -- that may be holding you back from improving your credit.

1. Not following a budget

What does budgeting have to do with your credit? A lot, actually. If you don't stick to a budget, you might accidentally overspend or take on bills that are higher than what you can manage. Once that happens, you risk racking up credit card debt.

Now one thing you may not realize is that even if you make all of your minimum credit card payments on time, the mere act of carrying a larger balance could cause credit score damage. Once you get on a budget, you're apt to have an easier time managing your money and realizing what you should and shouldn't be spending on. That may result in fewer credit card bills and less damage to your credit score itself.

2. Not checking your credit report

Credit reports aren't always accurate. And if yours isn't, the simple act of not reviewing it could mean sentencing yourself to a credit score that's lower than it needs to be.

Imagine your credit report has you listed as being delinquent on a debt you never racked up in the first place. That's the sort of detail that could easily cause your credit score to drop. But if you don't read your credit report, you won't know that error is there -- and you won't know to take steps to correct it.

You're entitled to a free copy of your credit report once a year from all three major credit bureaus -- Experian, Equifax, and TransUnion. It pays to access that report every four months or so and check it for errors that could be hurting your credit.

3. Having one large expense that's tough to keep up with

Committing yourself to one expense that's hard to keep up with could cause you to fall behind on other bills. The result? A large credit card balance that hurts your score.

Think about your larger expenses, like your home and car. Are they eating up an uncomfortably large amount of your income? If so, you may want to consider downsizing your living space or getting a roommate to lower your housing costs. Or, you may want to swap your car for a less expensive model -- or even consider going without a car if that's possible where you live. If you have access to public transportation and work remotely, a car may not be totally necessary.

A strong credit score could open the door to many possibilities. Be mindful of the things that could cause a credit score to drop and, if need be, make an effort to change your behavior so your score gets the boost it needs.

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