3 things that are stopping you from having better credit

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Want better credit? Here’s how to start.

Key points

  • Bad credit could make it difficult to borrow affordably when you need it.
  • These behaviors can lead to bad credit without you even realizing it.
  • Even one big expense could hurt your credit.

If your credit score has seen better days, it may be holding you back in more ways than one. A not-so-good credit score could get you turned down for a credit card, mortgage, or even a house to rent. And so it is important to work on improving your score.

But sometimes certain behaviors can lead to credit score issues. Here are three of those actions – or inactions – that can prevent you from improving your credit.

1. Not following a budget

What does budgeting have to do with your credit? A lot, in fact. If you don’t stick to a budget, you might accidentally overspend or take on more bills than you can handle. Once that happens, you risk racking up credit card debt.

Now, one thing you might not realize is that even if you make all your minimum credit card payments on time, just carrying a larger balance could damage your credit score. Once you’ve established a budget, you’ll have an easier time managing your money and realizing what you should and shouldn’t be spending. This can result in fewer credit card bills and less damage to your credit score itself.

2. Not checking your credit report

Credit reports are not always accurate. And if yours isn’t, simply not reviewing it could mean you are doomed to a lower credit score than it should be.

Imagine your credit report listed you as delinquent on a debt you never accrued in the first place. It’s the kind of detail that could easily bring down your credit score. But if you don’t read your credit report, you won’t know there’s an error and you won’t know how to fix it.

You are entitled to a free copy of your credit report once a year from the three major credit bureaus – Experian, Equifax and TransUnion. It pays to access this report every four months or so and check it for errors that could harm your credit.

3. Having a big expense that’s hard to track

Committing to a hard-to-track expense could cause you to fall behind on other bills. The result? A large credit card balance that hurts your score.

Think about your bigger expenses, like your house and your car. Are they eating up an uncomfortably large amount of your income? If so, you might want to consider downsizing your living space or finding a roommate to reduce your housing costs. Or, you might want to trade in your car for a cheaper model – or even consider going car-free if that’s possible where you live. If you have access to public transportation and work remotely, a car may not be totally necessary.

A good credit score could open the door to many possibilities. Be aware of things that could cause your credit score to drop and, if necessary, make an effort to change your behavior so that your score gets the boost it needs.

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