11 Sly Ways Good Credit Will Tempt You into Bad Debt

Have an excellent credit score? That's great, but don't go cueing up thetheme song as your personal soundtrack or crowning yourself a credit master.
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Have an excellent credit score? That's great, but don't go cueing up the Rocky theme song as your personal soundtrack or crowning yourself a credit master.

Credit scores that fall in the good to excellent range means you're paying bills on time and keeping your credit utilization (the percentage of your available credit that you've used) at around 30 percent or lower. Credit Sesame users who fall into the good to excellent range (700-840) are definitely keeping this number low -- they have an average credit utilization of just 14 percent.

While the benefits of having a good credit score are undeniable, it can also tempt you into making the following unwise decisions if you're not careful about your budget and planning. Take a look at 11 scary situations that you don't ever want to face.

If you haven't checked your credit report and credit score in a while, you can sign up and check it for free on Credit Sesame.

As millions of borrowers learned during the recent financial crisis: just because a bank is willing to loan you a ton of money doesn't mean you should accept it. So if your paycheck is more along the lines of a two-bedroom bungalow, don't accept a McMansion-size loan -- even if your credit score qualifies you for it.

Immediate discounts and other perks offered by store cards are definitely hard to turn down. But store cards charge high-interest rates (think: an APR of 20 percent or more), so it'll really cost you to carry a revolving balance on them. Not to mention that every time you apply for one, a hard inquiry on your credit report will be conducted, dinging that high score you worked so hard to obtain.

A top-notch credit score gives you the ability to lease a brand-new set of luxury wheels, usually for less each month than what you'd pay to buy the car, as you can see in this chart.

Leasing can make sense if you want a new car every three years. But if you'd rather hang onto your wheels for longer than that, renting your ride will cost you significantly more in the long run. Why? When your lease is up, the automaker owns the car, leaving you with no equity and the need to start the payment cycle all over again.

Everyone loves a fancy kitchen complete with a Wolf range and wine fridge. But if you need to take out a home equity line of credit (HELOC, for short) or a home equity loan to fund your upgrades, you might want to think again. After all, one mortgage can stress a budget; two can bust it.

Just because you have a limit that stretches well into the five-digit range doesn't mean you should utilize it. Much like purchasing a home that's bigger than what you can afford, a large credit limit can tempt you to charge more than you actually should: Using a large percentage of your available credit limit causes you to have a high utilization rate, which can put a dent in your impeccable score.

Excellent credit scores give you access to all the best credit-card deals, including cards with low APRs, like TK. But just because the interest rate is low doesn't mean that you should splurge and pick up bags and bags of designer duds, then take months to pay for your shopping spree.

Having good credit doesn't give you permission to be less diligent with your finances. Because identity theft can happen at any time, you should use a credit monitoring service, like Credit Sesame's, which gives you the ability to easily keep tabs your credit with little effort. And since late or missed payments can really dock your score, add a reminder to your smartphone's calendar, so that you remember to pay your bill on time.

Expensive cars come with expensive service. Even oil changes can be double the price.

When it comes to your wheels, an excellent credit score nets you the lowest interest rate on a car loan and the best price on your car insurance. That being said, just because you're getting the best deals doesn't meant that you can afford them. The cost of coverage for a BMW X3 is certainly going to be more than what you'd pay to protect your Honda CR-V. And even if you're only paying 1.5% rate on your car loan, you're going to shell out more in interest charges for that luxury ride.

A great credit score qualifies you for the Cadillac of rewards card, enabling you to rack up perks faster than those with just average credit. But there's also a dark side. Seeing points stack up can tempt you to spend more than you should -- simply to accumulate even more rewards.

If you're looking to upgrade from a flat screen to a home theater system, there's a chance you could be offered one of those "no down payment, no interest" promotions. While leaving your money in the bank to earn interest sounds wise, these offers can be fraught with problems, like high-interest charges that stretch back to the purchase date if you don't pay the bill in full once the introductory period is over. (And of course, there's the possibility of damaging your credit score if you make a late payment or miss one, too.)

Even if your credit score is 700+, playing the balance transfer game (aka: moving a revolving balance to a 0% APR card and then doing it again once the promo period ends) is never a good idea. The smart move: Pay off what you owe before the introductory period ends, keep from acquiring new debt, and stick with the plastic you have. Since opening new cards lowers your score, your credit -- not to mention your bottom dollar -- will thank you.

This article was written by Ashley Tate. You can see the original story on Credit Sesame.