Whether you are building or rebuilding your credit, there are some mistakes you can easily avoid that take nothing more than a little of your time. By sidestepping these pitfalls, you control your credit cards rather than your cards controlling you.
Don't Settle for High Interest Rates and Fees
Credit card companies don't advertise that lower interest rates and fees are there for the asking, but savvy consumers ask for them anyway. Like most businesses, these companies face stiff competition, and they grant most requests for lower interest rates and waive late payment fees to keep you as a customer.
Don't Approach Your Credit Limit
If you are one of the one-third of millenials who don't know the limits on their credit cards or have maxed out those limits, you are causing yourself avoidable headaches. Unless you are paying off your cards each month, carrying high balances hurts your credit score and your chances of securing additional credit. Keep your balances at 25 percent of your available limits, and watch your credit score grow instead of your interest payments.
Don't Forget Your Interest Rates
More than 50 percent of millenials don't know the interest rates on their cards, according to Experian. It's this group that ends up with balances they have difficulty catching up on. Remember to add the cost of interest when you consider larger purchases, and limit taking cash advances that incur interest charges even when paid in full.
Don't Let Late Payments Put You Further in Debt
While late payments here and there may not seem like a big deal, they reflect a whopping 35 percent of your FICO score. It can be hard to recover from this type of damage to your score, but keep in mind that late payments made within 30 days do not make it to your credit report. Also consider that a $30 late payment fee made four times per year costs you an additional $1,200 over the next decade.
Don't Avoid Your Credit Report
Most young people do not check their credit reports often enough, and many feel doing so will hurt their credit scores. The good news is that checking your report does not affect scores, and doing so regularly helps you address mistakes and prevent identity theft.
If you do find yourself in trouble with credit card debt, our attorneys can evaluate your situation and help you understand your rights and options.