What affects your credit score - 7 types of behaviors that damage your credit score

During your way of improving your credit score, you should also recognize behaviors that damage it. Here are 7 types of behaviors that damage your credit score:

1. Spending more than you can afford.

Your debt to income ratio should not exceed 43%. The debt-to-income ratio is all of your monthly debt obligations divided by your gross monthly income.

2. Not making a personal budget.

Managing a budget is a necessity for all aspects of financial management. Having this information will help you plan better and make informed decisions.

3. Not shopping around for installment loans.

Shop around for the best offers on mortgages, auto loans, and any other types of installment loans. This will help you find the lowest available interest rates, service charges, and fees.

4. Not watching out for fraud.

Monitor your credit report and credit card statements for errors monthly. Shred financial documents, statements, credit offers, and protect your information to avoid people committing fraud with your information.

5. Not keeping track of your credit applications.

Applying for too many lines of credit in a short period of time is a sign of high risk for default. If you’re going to apply for credit cards, only
apply for 1-2 per month.

6. Not saving for an emergency fund.

You never know when something can come up, so save at least three months of payments should an emergency arise.

7. Being underinsured.

Don’t try to save money by not having adequate health insurance. Medical debt is one of the most common ways people fall behind on debt and end up bankrupt.