Home > Personal Finance > 5 Honest Mistakes That Can Wreck Your Credit

Comments 0 Comments

In the world of personal finance, “the little things” aren’t so little. Overlooking a small bill, failing to pay a fee, forgetting about a credit card you rarely use — all these things can have serious consequences for your credit, which could hurt you when you go for “the big things,” like a new car or buying a home.

It’s not like you’re being careless or aren’t concerned about your finances. Mess-ups happen to everyone, but a few cases of forgetfulness can add up, causing serious credit damage. Here are five honest mistakes you want to avoid as you work on improving your finances this year.

1. Forgetting About That Credit Card You Just Opened

A lot of people get new credit cards during the holiday shopping season, often retail cards you opened at a store. Because you’re not used to having an extra bill, it’s easy to forget to pay it, but missing credit card payments will hurt your credit score. If it’s a one-time thing, it won’t cause long-term credit damage, but multiple missed payments will.

The same thing often happens when you charge something to a credit card you rarely use. If it’s not on an automatic payment, you might not remember when it’s due. Make a note in your calendar, or whatever way you choose to remember, to check for new and infrequent statements.

2. Assuming an Automatic Payment Is Going Through

Speaking of automatic payments, you need to check up on them from time to time. When you first set them up, you should make a reminder to check your accounts on the day the bill is due, because it sometimes takes a few billing periods for automatic payments to kick in.

After that, don’t forget to check it’s still working. If you get a new credit card and forget to update payment information for your utilities, you might end up with late fees, service interruptions or a bill that goes to a debt collector. If it’s an automatic payment for a debt, you could face similarly dire consequences.

3. Thinking You Made a Payment But Didn’t

You should make a habit of checking your bank accounts daily to watch for unauthorized activity, but this also comes in handy when confirming you’ve paid your bills. If you’re sending a payment through the mail, there’s always a chance it could get lost. When making online payments, you might have thought you paid but forgot to confirm the transaction, or it just didn’t go through for some reason.

If you have joint finances with a spouse or partner, you need to communicate about paying bills. It’s not uncommon for both spouses to think the other has paid a bill, or one person isn’t being honest about financial difficulties preventing you from keeping your accounts current.

4. Missing a Bill Notice

Account statements, whether paper or electronic, are easy to overlook. They get lumped in with other mail, sometimes junk mail, and if you’re not careful, you might discard something important. This is especially true when you’re billed for something irregularly. For example, you may pay your homeowners association fees once a year. If you miss the letter with your HOA bill on it, you could easily forget to pay it and get sent to a debt collector or even put your home in jeopardy because of it. Make sure you’re monitoring your mail and email for bills and if you know you have a habit of misplacing bills, make a filing system to help you stay organized.

5. Assuming Your Insurance Is Covering a Medical Bill

A lot of people find medical billing and health insurance confusing (it often is). When you get summaries from your insurance company and bills from your doctor, read them carefully, save the paperwork, and call your insurance or healthcare provider with any questions. Medical bills may be quickly turned over to debt collectors, which can hurt your credit, not to mention become a huge pain to resolve.

Perhaps you’ve sensed a theme: You have to be somewhat organized to protect your credit from unnecessary damage. If that’s not a quality you naturally possess, it’s crucial you figure out a way to make it work for you. There are free budgeting programs online that send you bill alerts, and you can also set them up with most of the companies you need to pay regularly. Sticky notes, a white board on your fridge, calendar reminders — whatever it takes, stay on top of the little things. Also keep an eye on the big picture — that is, your credit. Check your free annual credit reports for any issues or mistakes that need to be addressed, and keep an eye on your credit score to track your progress. You can get two of your credit scores and a summary of your credit reports for free on Credit.com.

More on Credit Reports & Credit Scores:

Image: iStock

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team