5 Big Credit Card Mistakes You Are Making

Credit card mistakes have a huge impact on your credit score. This can impact buying a new automobile, the interest payments on a home and more.

Love it or hate it, but you can’t ignore the importance of credit score. Not only will stellar credit score help you get lucrative offers on credit cards, it’s essential for obtaining the lowest rates on a mortgage or an auto loan. That’s not all. Credit score affects several other aspects of your life such as:

  • Your auto insurance premiums
  • If you’ll get a rental apartment
  • If you’ll get a job since many employers check credit report of applicants

Unfortunately, consumers are making huge mistakes that are ruining their credit. Since it becomes tough to obtain home loans/credit cards at suitable terms and conditions, so it’s important to avoid making these 5 costly credit card mistakes that can hurt your credit.

Making Late Payments

Payment history constitutes 35% of your credit score. Lenders give a lot of importance to this factor at the time of checking your loan application.

Late payments affect your payment history directly. Plus, credit card companies impose late fees, fines, and penalties.

Let’s check out how drastic the situation can be after a 30-day late payment.

When your credit score is 670: A 30-day late payment can drop your score to 520 or 530.

When your credit score is 720: A 30-day late payment can drop your score to 580 or 590.

When your credit score is 780: A 30-day late payment can drop your score to 620.

Several credit card companies offer tools that can help a consumer make timely payments. There’s also an option to make automatic payments so that there is no scope for late payments. If you have a tendency to forget payment dates, then you can use these tools to pay all your bills before the due date.

A High Credit Utilization Ratio:

This is the second most important component of your credit score and is another significant credit card mistake. It accounts for 30% of your credit score. The credit utilization ratio is the ratio of the outstanding balance to the total amount of credit extended.

Credit utilization ratio = Outstanding balance/Total credit

The higher your credit utilization ratio, the lower your credit score. The ideal credit utilization ratio is 0%, which is difficult to maintain. So, financial experts recommend consumers to maintain a credit utilization ratio between 0% and 30%. The lower is the credit utilization ratio, the better for your credit score.

Not Paying the Minimum Amount:

It is true that paying just the minimum amount is not good for your financial health. But paying less than the minimum amount is worse.

You need to make timely payments to avoid being considered delinquent. Pay at least the minimum amount, which is mentioned on your credit card bill. If you pay less than the minimum amount, then it will be considered as late payment. This will hurt your credit score.

A smart financial move is to make additional payments on your credit cards whenever you can.

Quitting Old Credit Cards:

Some consumers cancel all their credit cards to avoid getting into debt problems. But in fact, canceling old credit cards is a bad financial move. It hurts their credit score. I’ll explain you why.

Two things happen when you cancel old credit cards. First, your credit-utilization ratio drops. Second, your length of payment history (which accounts for 15 of your credit score) gets reduced, and this lowers your score. If you don’t want to use an old credit card account (which is in good standing), then keep it in a secure location. But, don’t close the account just because you have to pay the annual fee. You can request the credit card company to waive the fee.

Failure to Make Payments:

Sometimes, it happens that you get stranded with someone else’s debt. For instance, you’re the co-signer on your friend’s credit card. If he doesn’t pay credit card bills properly, you’ll be in trouble. Your credit score will drop due to the negligence of the primary account holder. Plus, the creditor will run after you for payments. You’ll be punished for your friend’s mistake. And, your redemption is to pay all his/her credit card bills since you’re equally responsible for the payments.

A similar scenario can happen when you break up with your spouse. You’re responsible for the payments on the joint credit card accounts. It doesn’t matter if you have legally separated from your spouse. You’re still responsible for the payments of his purchases. If you or your ex doesn’t pay the bills, then it will drop your credit score.

Don’t worry! Your ex will also suffer since his/her credit score will drop too.


Credit cards help you build credit if used in the right way. But be careful when you’re using this mode of payment. If you make the aforementioned mistakes, your credit will be ruined

Patricia Sanders is a content contributor at Debt Consolidation Care Community. She loves to read, write and explore articles on different topics. You can find her articles at and connect with her at

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