She Strengthens

The Surprising Ways I Tanked My Credit Score (And How You Can Avoid the Same Mistakes)

Lesson 1: Don’t Keep Your Cards Zeroed Out for Too Long

I thought I was doing the right thing by paying off my credit card balances in full every month. But, I soon discovered that keeping my cards at a zero balance for extended periods can actually harm my credit score. The problem is that credit card companies may view this behavior as inactivity, leading them to close your account or reduce your credit limit. This, in turn, can lower your credit utilization ratio and negatively impact your credit score.

Instead, I learned to keep my cards active by setting up small, recurring payments, like my Netflix subscription or gym membership. This way, I can avoid having my accounts closed or my credit limit reduced.

Lesson 2: Don’t Close Your Cards Too Quickly

When I finally got back on my feet financially, I made the mistake of closing two of my credit cards. I thought I was being responsible by reducing my credit exposure, but I ended up hurting my credit score. Closing a credit card can lower your overall credit limit, which can increase your credit utilization ratio and negatively impact your credit score.

The better approach is to wait until you’ve increased the credit limit on your remaining cards before closing any accounts. This way, you can maintain a healthy credit utilization ratio and avoid taking a hit to your credit score.

Lesson 3: Don’t Be Afraid to Spend (and Pay Off) Your Cards

I used to think that using my credit cards sparingly was the key to maintaining a good credit score. But, I discovered that not spending enough on my cards can actually harm my credit score. Credit card companies want to see that you can manage your credit responsibly, which means using your cards regularly and paying off your balances in full.

To avoid this mistake, I started using my credit cards for everyday purchases and paying off my balances in full each month. This approach has helped me maintain a healthy credit utilization ratio and improve my credit score over time.

The Takeaway

Repairing my credit score has been a learning experience, to say the least. By avoiding these common mistakes, you can save yourself the headache and financial cost of repairing your credit score. Remember to keep your cards active, avoid closing accounts too quickly, and use your cards regularly to demonstrate responsible credit behavior. With time and patience, you can achieve a healthy credit score and enjoy the financial benefits that come with it.