There has never been a time in American history when credit has been more important. The subprime mortgage meltdown, the credit crunch and increased credit regulations have made it very difficult for even good credit consumers to get the financing that they need.
In a tough economy, it’s easy to lose track of your credit because you’re scratching to pay the bills each month. Here are three mistakes that consumers make that can ruin their credit, especially in a difficult economy.
Mistake #1 – Not prioritizing bills:
Consumers should know who traditionally reports to the credit agencies and who does not. Utility companies usually do not regularly report activity to the credit agencies unless the item turns into a collection account or a charge off. That means if you’re going to be late on a bill, choose a bill that does not traditionally report to the credit agencies. You must make sure it does not go into collections however or it will likely effect your credit anyway.
Mistake #2 – Not having enough credit:
Many people try to steer clear of any credit in tough times but that can be just as harmful as over using. Eventually, you will need credit and if you don’t have any history you will be turned down because the bank cannot determine your risk level. Try to have at least 3 to 4 accounts active at all times. 1-2 major credit cards (not department store cards) like Visa, MasterCard or Discover. A “paid on time” installment loan goes a long way to building your credit and adds to the good credit mix that the scoring models are looking for.
Mistake #3 – Co-signing for a friend or loved one for some type of credit:
There is almost no other issue that is more frustrating and common, in terms of good credit individuals then co-signing. Boyfriends, girlfriends, fianc
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