About 25 percent of Americans have never even taken a look at their credit score. While shocking, it leads to this question: What does your credit report say and have you been making any mistakes with your credit?
A lot of Americans are simply not in the know about what's on their credit report these days. You'd think this would be of greater importance, because your credit rating can either cost or save you a fortune. According to U.S. News & World Report, there are several mistakes that you will want to avoid at all costs with your credit.
The accuracy of your credit report is very important. A good example is that some people who share a common name or similar address can suffer from a credit mix-up. This can mean that John's maxed out $10,000 credit card is showing up on your report and is sucking points away while jacking up your interest rate or flat-out getting you declined for new loans.
Inaccurate information on a credit report that you know is incorrect could also mean that you are the victim of identity theft or even fraud. It's good advice to review your credit report at least twice per year and to immediately take action to correct any inaccurate information you find.
Unpaid Ghost Bills
Now most people would say, "I am great about paying my bills!" This is not presuming that you aren't. But sometimes companies make errors. Sometimes you never receive the bill and it goes to collections, where it can mess up your credit. Other times you may have never known about a bill that is screwing with your rating.
In many cases, you can simply dispute these online. The creditors have 30 days to prove the bill is valid and to send you a copy. If they do not do this, you can easily clear such ghost bills off your credit report once and for all. Or you can pay them if it turns out that you actually do owe the funds.
Utilizing Too Much Credit
Another mistake that's commonly made is by utilizing too much of your credit, which can look irresponsible to banks and make you a higher lending risk. Experts say that you should try to avoid exceeding 20% of your credit limit. Once you hit that 20 percent cap, it can knock your credit score down a lot.
Another solution is to request an increased credit limit on cards that have a balance greater than 20%. In some cases, this can help improve your score by reducing the balance-to-limit that's being used, or your debt-to-credit ratio.
By all means, avoid making these common mistakes with credit. They could mean the difference between you getting approved for that loan you need at a reasonable interest rate... or not.