Let’s face it, none of us are perfect — especially when it comes to money. But there may be some things you’re doing that are damaging your finances, and ultimately your credit profile, that you’re not aware of.
Take a look at these 26 habits and see if any of them apply to you. Changing your ways might help you improve your credit, ultimately giving you an easier path to getting good terms and conditions on any future loans, credit cards or lines of credit. It may be an easier adjustment than you expect.
1. Not Checking Your Mail
It may seem like a small thing to miss, but if you aren’t checking your mail on a regular basis you may not see that a bill has arrived, causing you to miss a payment. Sure, not all of your bills report your payment history to the credit bureaus (like your cellphone provider or cable bill), but if you’re late enough, the bill could end up in collections, which may appear on your credit reports.
It may be easy to think “this bill isn’t due yet, so I’ll get to it later,” but doing so may not be the best route. If you forget it long enough, you may miss the payment deadline and get hit with late fees or, worse yet, send your account to collections.
3. Choosing Convenience Over Cost
Have you ever noticed how everything convenient has an added fee? Buying concert tickets online, ordering food to be delivered, sending out your laundry — it all comes with a price.
Instead of racking up convenience charges on your credit card that you really can’t afford, think about if there’s a less expensive alternative. Give up that cab ride and take public transit. Sure, you may have to adjust your plans, but your wallet will thank you, as will your credit. Racking up a lot of debt may cause you to get too close to your credit limit, which can ding your credit.
4. Ignoring Your Budget
You went through the process of creating a budget, so it’s a good idea to try following it. Sure, there are times when you might decide to splurge on something you didn’t foresee spending money on, but overall it’s a good idea to stick to your budget. This way, when it comes time to make your student loan payment or mortgage bill, you’ll be more likely to have the funds to do so. Not only will this help you get those bills paid, but it will help you maintain a healthy payment history, which will benefit your credit.
Smoking, vaping … cigarettes, cigars — whatever your vice, it’s costing you. The average pack of cigarettes in the U.S. cost $5.51 in 2015, according to Fair Reporters, so if you’re buying a carton of cigarettes on a weekly basis (typically 10 packs), you’re looking at about $55 every week, or $2,860 each year. Yes, we know this habit can be challenging to break, but think about this: By even cutting back a little, you could have extra money to put toward paying off your student loans or credit card debt, in turn helping to improve your credit scores (and your health).
Another vice that may be challenging to give up is alcohol, whether it’s that bottle of wine in your fridge or martinis at the bar by the office after a long week. But your budget may thank you if you cut back on this expense too, as tossing another drink back can potentially land you in debt if you do it enough.
7. Eating Out Every Day
Eating out every day can be a fun social experience (and can get you away from your desk), but those mid-day meal charges add up. Try bringing lunch from home at least once a week to help you add a little wiggle room to your budget. And you can still enjoy some social time with coworkers away from your desk by enjoying your lunch together in the break room.
8. Skipping Car Payments
If you decided to go with the new Shelby convertible when the Focus was really more within your budget, you may be struggling with making those loan payments. But the answer to your problem certainly isn’t skipping out on making payments. Not only will this make it more challenging to catch up on what you owe, but it will certainly damage your credit (and make it harder for you to get good terms and conditions on a loan in the future). Before you get in too far over your head, consider talking with your lender about your options.
9. Buying More House Than You Can Afford
That luxurious walk-in closet or swimming pool may seem idyllic, but if you get yourself in over your head with your mortgage payments and ultimately foreclose on your home, your credit could really take a hit. You can use this tool to help you figure out how much house you really can afford before signing on the dotted line.
10. Defaulting on Student Loans
It can be difficult to make those student loan payments when you graduate without a job, or if you’re just barely scraping by with your hourly wage. But it’s important to talk with your lender if you don’t think you’ll be able to make your payments. Otherwise, you’ll take a major hit on your credit (and may face wage garnishments or other forms of collecting on your debt).
11. Ignoring Little Medical Bills
Get a charge you don’t agree with, or just forget to pay that minor charge your insurance didn’t pick up? You don’t want to let these slip through the cracks, as the charges could ultimately get sent to collections and infect your credit.
12. Trashing Parking Tickets
You were only there for a minute, or that meter ran out before you could get back to your car — whatever the situation, you got a parking ticket. And you don’t want to pay. But, if you choose to do that, you could ultimately end up paying more down the road, thanks to it ending up in collections.
And if you get the ticket in someone else’s vehicle (think teens driving Mom or Dad’s car) and toss the ticket, it could be damaging to the car owner’s credit. They may not even know about it until they review their credit reports and see this negative item is bringing down their scores, as it was sent to collections.
13. Going Over Your Data Allowance
If you’re going over your cellphone’s data usage, you’re going to be paying some hefty overage fees. If this becomes a habit, you’ll see your bill climb each month. And, if it reaches a number you just can’t afford, you may be looking at stalled payments. While this may not be reported immediately to a credit bureau, if you continue to miss payments, you run the risk of not only having your service shut off, but having your bills sent to collections.
To help you avoid costly overage fees, consider connecting to free Wi-Fi hotspots whenever possible— just make sure the connection is secure to help protect yourself from the risk of identity theft.
14. Only Checking One of Your Credit Reports
You know you’re supposed to look over your credit report, but you may not realize there’s more than one you should be looking at. The three main credit bureaus — Experian, Equifax and TransUnion — don’t communicate with each other, and every place doesn’t report to each of the big three. Because of this, your reports may have different information on them. This is why it’s a good idea to check all three of your credit reports for any problems or discrepancies, which you can do for free once each year by visiting AnnualCreditReport.com.
15. Ignoring Your Kitchen Coffee Maker
You know it’s right there on your counter and can brew while you finish getting ready to head out the door, but it just sounds so much easier to stop at your local coffee shop. But give it a try — cutting back on your shop visits a couple times each week can benefit your budget. You can use that extra money to help you pay down your debts, which can help improve your credit scores (and, ultimately, help you qualify for better terms and conditions on any future loans). Best of all, there’s nothing like waking up to the fresh aroma of coffee in the morning.
16. Maxing Out Your Credit Card
Your debt usage makes up a large percentage of your credit scores and experts recommend keeping the amount of debt you owe below at least 30%, ideally 10% of your available credit. Think of it like this: You may have a $1,000 limit, but that doesn’t mean you should spend $1,000 each month, especially if you don’t have the cash to pay off those charges in full come statement time.
17. Having an Online Shopping Addiction
Some sites make it easy to get everything, from winter boots to items for your pantry, with just a few clicks and a charge to your credit card. And with that big of a selection, you’re sure to find items you never knew existed, but now that you do you just can’t live without them. But all this shopping can hurt your credit, as you run the risk of maxing out your card, which affects your debt usage — a big influencer of your credit scores.
18. Not Checking Your Statements
If you just pay your credit card statements when they arrive without looking at them, you could be putting yourself at risk. Not only will you miss out on insight into what you’re overspending on, you might also miss inaccurate charges, which can be a sign of identity theft. The longer the mistakes go undisputed, the harder it can be to remedy the problem. And you don’t really want to pay for someone else’s spending spree, anyway.
19. Only Paying the Minimum Balance
First things first — it’s usually a better idea to pay the minimum due than to miss a payment. But that doesn’t mean it’s ideal, either. By doing so, you’ll be racking up interest charges, which means it’ll probably take you longer to pay off that debt than if you paid the statement in full each month. You can use this tool to see how long it will take you to pay off your credit card debt (which will ultimately improve your credit scores).
20. Collecting Credit Cards
If you hear about a new credit card hitting the market and you instantly fill out an application, you may be in troubling territory. No, there’s no specific threshold for how many credit cards is too many, it just comes down to how you use the plastic. And it can be tempting to overuse your cards to collect on those perks. Even if you’re a responsible card user, it’s important to remember that each time you apply for a new line of credit, a hard inquiry is placed on your credit history, which will ding your scores.
21. Charging Everything You Buy
It’s so easy to hand over your plastic for whatever you want, whether it’s your morning latte, your weekly groceries or that cute new sweater. But these charges add up and, while they may seem minor at the time, can be overwhelming when that credit card statement arrives. Try to be conscientious about the items you charge so you don’t rack up too much debt or go over your limit and get hit with overage fees. And you’ll also want to think about your credit utilization — if you keep adding on charges until you’re bumping up against your limit, instead of keeping your credit balance around the recommended 30% of your total credit limit, your scores may begin to sink.
22. Spending to Get Rewards
There are a lot of great rewards credit cards on the market, offering you perks like cash back and airline miles. But if you’re just spending money to rake in these kickbacks, you may be doing yourself a disservice. Many of these cards carry a higher interest rate than standard cards, so if you tend to carry a balance, you’ll really pay for it. And some even carry high annual fees that you may not make up if you overspend and have to carry a balance.
23. Paying for Your Pals
When you’re out on the town, it can be kind of a pain to have the server split the check between all of you, so sometimes one person will put it on their credit card and get reimbursed. But, before you volunteer for the job, think about this: Your friends may not repay you before your bill comes due and, if you don’t have enough funds to cover the expense, skipping out making the payment may be your only option. While you do intend to pay it once everyone has given you their share, your choice to pass on paying on time can ding your credit. Make this behavior a pattern and you’ll really see your scores dip.
Next time, consider letting the staff know ahead of time that you each want your own bill to avoid the hassle.
24. Following the Crowd
It may seem like your best friend is always on a lavish vacation, and when she isn’t she’s spending hours at Sunday brunch. And when you try to keep up, your bank account is nothing like those bottomless mimosas you had last weekend (that you are still paying for). The difference may be that she has a higher salary than you or has roommates while you’re living on your own, or perhaps is overextending herself without you knowing it. Whatever it is, everyone’s finances are different and you shouldn’t try to live your life based on someone else’s budget.
25. Closing Credit Cards
Many folks make it a habit that, once they’ve paid off a credit card, they close the account. While this can help you avoid the temptation of overspending, doing so can be damaging to your credit. Not only will it harm your credit utilization, but it can also impact your overall credit case (which is another factor that contributes to your overall scores).
26. Spoiling Your Pets
Just like it’s not a good idea to get everything for your kids, you probably shouldn’t be getting all the things for your fur-baby either. If you do find a big ticket item you think your pet just must have, consider building it into your budget and saving up for it. Otherwise, going into debt for new toys or clothes for your pet could cause damage to your credit and make it harder for you to qualify for good mortgage terms and conditions in the future.