Credit Score Sleepers: Small Habits That Quietly Hurt Your Score

4 MIN. READ

 

Key takeaways:

• People often think only major financial decisions will impact their credit. The truth is that small daily habits can increase or lower your score.
• You can improve your credit by adopting a few simple habits, such as automating your payments or making more than the minimum payments.
• Power Financial Credit Union is here to help with personalized advice and accessible credit products. 

It’s not always the big things hurting your credit.

Sure, opening a new credit card or paying off your car loan early will have an impact on your score, but small daily habits could be costing you 20 to 50 credit points.

We see many of our members overlook these small things, but the truth is that you can gain some points on your credit score with just a few day-to-day changes. We’re here to share the most common credit mistakes to avoid and the best small tweaks that take you 10 minutes or less to implement for a higher score.
 

Top Silent Credit Score Killers

We call these mistakes silent because they’re easy to make, and they won’t impact your finances right away. However, you could be losing points if you’re guilty of the following:
 

• Missed payments. Overlooking a due date could cost you anywhere from 30 to over 100 points. It’s an easy mistake to avoid with reminders and automated payments.
• Closing old accounts. The age of your oldest credit line matters for your credit score, and closing it will erase a big portion of your credit history.
• Applying for too many cards at once. Try waiting at least six months between applications so you have plenty of time to rebuild credit after opening a new account.

Misconceptions That Hurt Your Credit

The day-to-day habits hurting your credit often come from misconceptions about how credit works. Let’s set a few things right:
 

• A zero balance isn’t always best. It keeps your utilization ratio low, but anything under 30% is good. If paying off a credit card down to zero means you’re struggling to pay another bill, it’s not a good strategy.
• Minimum payments aren’t always enough. You’re avoiding late fees, but you should pay more to increase your available credit and reduce your utilization ratio. This is what responsible credit usage looks like.
• You can check your credit score without losing points. Inquiries will cost you a few points when lenders check your credit, but you can review your own credit report without lowering it. (Visit AnnualCreditReport.com to get started).

Habits That Actually Help Your Credit

It’s easier to adopt good credit habits if you use the right products, which can include credit cards, personal loans, auto loans, and more.

Here’s an example of responsible credit management that will boost your score:
 

• You have an existing car loan, and you prioritize this payment in your budget.
• You charge utility bills to your credit card and pay the balance off in full to rack up rewards.
• Once every six months, you charge a large purchase, such as a new appliance or a trip, to your credit card and give yourself six months to pay it off.
• There should be enough breathing room in your budget to handle paying off an unexpected $1,000 expense charged to your credit card over three to four months.

You can tailor this plan to your unique situation, but it should give you an idea of what good credit habits look like. If you’re not sure where to start, go over your budget and calculate how much you can spend on credit card and loan payments every month. You can then decide how much you’re comfortable borrowing or charging to your card based on what’s available for monthly payments. 
 

How PFCU Keeps You on Track

Power Financial Credit Union is here to help you adopt better credit habits with convenient mobile and online banking tools. Once you’ve set up your digital accounts, you can check your balance on the go and schedule automated payments easily to never miss a due date.

Plus, we offer personalized advice at our South Florida branches. If you’re not sure what to do with your current credit situation or need help navigating credit cards and loans, we’re here to help.

As a credit union, our goal is to make credit cards and loans accessible to everyone. We do this by offering lower APRs, so you can save on the products you need. We recommend applying the savings toward your balances to keep them low!

Do you need help adopting a better credit management strategy? Contact us or visit one of our South Florida branches so we can discuss your finances and devise a plan.

FAQs

What lowers your credit score?

Being always late with your payments, keeping your utilization rate high, and opening new cards too often are common culprits for losing credit points.
 

What are some common credit mistakes to avoid?

We see many people using the wrong credit products and overpaying for interest or fees. Other common mistakes include making only the minimum payments and taking on more credit purchases than you can pay back.
 

What are some simple ways to boost your credit score?

Check your credit report and dispute any errors. Next, you can sign up for Experian Boost to get a few points for recurring payments, lower your utilization rate with larger payments, and diversify your credit mix with new products.