Managing Credit

3 Big Credit Mistakes And How to Avoid Them

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Even the most credit-savvy consumer can make a money management mistake. Try these strategies to recognize and avoid the most common slip-ups before they cause trouble for your credit score.

Mistake #1: Avoiding using credit

Consumers often believe if they don’t charge purchases to their credit cards, they won’t have any bad credit history, and therefore, they’ll have a good credit score, says Lee Gimpel, director of development for LifeWise Strategies, LLC in Wilmington, North Carolina and co-developer of The Good Credit Game, a financial education tool.

“Not true,” Gimpel says of this perception. “Credit rating companies think, ‘If you haven't proven that you can use credit responsibly, then we can't trust you.’”

Knowing how your credit score is calculated will help you work to improve it. “Your credit score doesn’t count how much money you have in the bank (or under the mattress) at all,” Gimpel says.

“The bottom line: A credit score relies on your history of using credit, not how much money you earn or have.”

Mistake #2: Missing a payment

Payment history is typically the largest factor used to determine your credit score, so missing (or being late for) even a single bill payment could cause your score to drop.

Bills for credit cards, mortgages and major loans are commonly reported to the national credit reporting agencies and will influence your credit score, while bills for smaller companies, gym memberships and utilities are reported less often.

Regardless of the type of bills, you should always strive to pay them on time, says Andrea Woroch, a consumer advisor and money-saving expert in Bakersfield, California.

Since so much of your credit score depends on your history of bill payments, take proactive steps to stay on top of your finances: “Set up auto payments so that you don't miss the deadline dates or set reminders on your phone or computer about upcoming dates,” Woroch says.

Mistake #3: Not checking your statements and credit report 

If you spot a mistake on your credit card statement, it may not be cause for alarm.

“If I see a $20 charge on my monthly credit card statement that I didn't make, that inaccurate charge is probably not going to affect my credit score,” Gimpel says. “You'd want to fix it and not pay charges that aren't yours, but that shouldn't be an issue for your overall credit picture.”

However, if an inaccurate credit card charge raises your debt-to-credit ratio, or how much of your available credit you are using, it could reflect negatively on your credit score. While an unknown credit card charge may just be a simple mistake on the part of your card issuer or merchant, it could also be a sign of fraud or identity theft, which could wreak havoc on your credit score over time.

In addition to staying on top of credit card statements, you should regularly review your credit report to ensure all the information is accurate. You can order one free copy of your credit report every 12 months from each of the three national credit reporting agencies through If you do catch a mistake, contact your creditor and the agency reporting the error to file a dispute.

By regularly checking your credit report, you can avoid common credit mishaps—or address them before they become long-term credit woes.

Looking for more ways to build your credit?

Learn how a SunTrust Secured Credit Card can help you build credit.

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