Mistakes That Damage Your Credit Score

Have you ever applied for a loan or a credit card and been rejected because of a low credit score? Or have you struggled to meet ends because of high debt interest rates? A credit score reflects your creditworthiness and financial responsibility. It is a three-digit number ranging from 300 to 850, and the higher your score, the more chances of loan approval will be there with favorable terms and low-interest rates.
However, many individuals make mistakes that can damage their credit score and hinder their ability to obtain credit or loans. These mistakes can range from not checking their credit score regularly to co-signing for someone else’s loan. In this article, we will discuss seven common mistakes individuals make that can damage their credit score and provide practical tips on avoiding them. Avoiding these mistakes can protect your credit score and improve your financial well-being.

So, if you want to maintain a good credit score and avoid financial difficulties, read on to learn about the top mistakes to avoid:

Not Checking Your Credit Score Regularly:

Your credit score can frequently change, and it is crucial to monitor it to identify any errors, discrepancies, or fraudulent activity. If you check your credit score regularly, you might be aware of any issues once it’s too late, which could damage your credit score severely.

Check your credit score regularly through online portals such as Credit Karma or credit bureaus such as Equifax or TransUnion. It helps identify any issues early and take proactive measures to fix them. You can check your business credit score through various online portals like Paytm CIBIL Score Check Online.

Maxing Out Your Credit Cards:

When you max out your credit card, it shows that you are relying heavily on credit, and it can also increase your credit utilization, which can lower your credit score. Keeping low credit card balances and paying in full each month is essential. If you cannot payoff your credit card balances in full, it is better to pay more than the minimum amount due to reduce your balance and avoid high-interest charges.

Applying for Too Many Credit Cards:

When applying for a credit card, the lender will inquire about your credit report, which may decrease your credit score. If you use multiple credit cards within a short period, the hard inquiries can add up and damage your credit score significantly.

Furthermore, applying for too many credit cards can also increase your credit utilization, which is the percentage of your credit limit that you are using. High credit utilization can also lower your credit score, so it is essential to keep your credit utilization low by paying off your credit card balances in full each month.

Making Late Payments:

Delayed payments on your credit cards, loans, or bills are among the most common mistakes individuals make. Late payments can incur late fees and interest charges, and they can also damage your credit score.
Your payment history makes up a significant portion of your credit score, and making late payments can lower your credit score significantly. It is essential to make all payments on time, and if you cannot, it is better to contact the lender or service provider and work out a payment plan.

Closing Your Oldest Credit Card:

Your credit score is determined based on your credit history, and the length of your credit history is an essential factor. You may also wonder how to “check my credit score’. Closing your oldest credit card can shorten your credit history, lowering your credit score. It is essential to keep your oldest credit card open, even if you use it sparingly. If you need to close a credit card, it is better to approach a newer one rather than your oldest one.

Not Checking Your Credit Report for Errors:

A credit report includes details about your previous credits, including your credit accounts, payment history, and other personal information. It can also include inaccurate information about your credit accounts, such as a missed payment or a late payment you made on time.

These errors can negatively impact your Credit Score and make it harder for you to obtain credit or loans in the future. That’s why it is crucial to check your credit rating report at least once a year and look for any errors or discrepancies. If you find any errors, you should immediately report them to the credit bureau so you can correct them.

Co-signing for Someone Else’s Loan:

Co-signing for someone else’s loan is a common mistake that can damage your credit score. When you co-sign for someone else’s loan, you become equally responsible for repaying the loan. If the borrower defaults or makes late payments, it can negatively impact your credit score.

Before you co-sign for someone else’s loan, it is essential to consider the potential risks and ensure to afford the loan repayment if necessary. It is also crucial to communicate openly with the borrower and ensure they understand their responsibility to repay the loan on time.

read more: How to choose a credit card for the first time?


Maintaining a good credit score is crucial for your financial health, and it requires a proactive approach to avoid common mistakes that can damage your credit score. Avoiding these mistakes can protect your credit score and improve your financial well-being. Educating yourself on how credit works and developing good financial habits to maintain a healthy credit score is essential.

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