Keeping your credit history and your credit score in excellent standing will always work in your favor. But just how do you do that? Many consumers understand the importance of good credit but not many are aware about the factors that lead to bad credit. How can you achieve an excellent credit standing? This article will discuss the things that lead to bad credit that must be avoided along with the correct steps to take for a better credit.

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Late Payments. This may not be the first you heard of this. It is true that even a single late payment can affect your total credit score. Timeliness of payment makes up about 15% of your FICO score so this is something you should definitely watch out for. If you feel like you’re not going to make your due date, call your creditor right away and explain your situation. Tell your creditor that you will be submitting your payments just a couple of days late and request for it not to be reported as late. If you give advance notice, most creditors will be willing to extend up to 30 days and not consider it as late payment.

Excessive Credit. How much of your available credit you use can make or break your credit score. Ideally, you should not use up more than 30% to 40% of your allotted credit. If you have a low interest credit card, be careful that you’re not overusing this one card for all your charges. To avoid exceeding your credit limit, make it a habit to pay off your credit card balances in full each month.

Charge Offs. Charge offs are debts that you end up not paying at all because your creditors have given up with their efforts to collect them. These are very derogatory marks that can pull down your credit score a lot. To prevent charge offs, make sure that you respond to your creditors immediately whenever they try to contact you. Never hide or run away from your creditors.
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Too many inquiries. Each time you apply for credit, the lender will make an inquiry in your credit report. All inquiries done will be reflected in your credit report. Why are too many inquiries be bad for your credit? First of all, applying for too many accounts at once sends out a negative impression to lenders. Even more so each time your application gets declined by a lender. Such rejections send out the alarm to a prospective lender that you may be a high risk borrower. Therefore, be careful about sending credit card applications if you’re not serious about the card. Some people send credit card applications just to get the free shirt for signing up. You may think that you lose nothing, but such a habit can really damage your credit score.

Unauthorized charges. Finally, no matter how careful you are as borrower, you may become a victim of fraudulent transactions at one time or another. You may not even know that you have a past due debt with one of your credit cards because you didn’t even make those purchase in the first place. How do you prevent such cases? By checking your credit card statements regularly and checking your credit report at least twice a year. In case of unauthorized charges, you can dispute them right away and keep them from damaging your credit.