4 credit card habits that lead to bad credit history

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Credit Card Applications » Research » Guides » Building Credit History » 4 credit card habits that lead to bad credit history

4 credit card habits that lead to bad credit history


Updated: December 26, 2012

The content is accurate at the time of publication and is subject to change.

There are some credit card habits which have increasingly spoilt the credit history of a customer. These credit card habits need to be gotten rid of, in order to preserve the creditworthiness of the customer which is often measured by the credit rating of the individual.

Carrying over outstanding balances

Many credit card customers seem to think that it is perfectly fine for them to carry over their outstanding balances from one month to the next. These outstanding balances not only lead to various penalties including late payments and overdraft fines for crossing the credit limits, but also contribute to the interests which increase the outstanding balances. Credit card customers need to look at paying off the outstanding balance instead of charging it every month, irrespective of whether they can pay off the outstanding or not.

Maxing out credit cards

The credit limit is an extreme amount that is provided to the credit card customers to be used only in emergency cases. In normal situations credit card holders are expected to keep their outstanding balance well below the credit limit. However, it is commonly seen that customers have maxed their credit cards which means the outstanding due has crossed the credit limit. The credit utilization ratio is maximum leading to lowering of the credit history.

Going overdraft on the credit cards

Some credit card issuers allow customers spend beyond the credit limit by charging a penalty called overdraft fees. Credit card customers are not only exceeding spending limits by crossing the credit line but are incurring additional debt in the form of extra payments or fines, which should have been avoided at all costs.

Ignoring the financial monthly report and missing bill payment deadlines

A lot of credit card customers seem to ignore the monthly expenditure report. They are not willing to look for expenditure patterns on their card that could have been avoided to a great extent. Secondly, the report will also tell you how much minimum payment you should make to avoid late payment fees and other such charges. Credit card customers instead don't seem to be aligning their expenses with the credit card bill payment deadlines. This leads to lot of additional interest being accumulated on the credit card. In fact, if the bill payment deadlines are missed consistently, credit card issuers can even raise the interest rates further leading to lowering of credit rating further.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
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