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A Bad credit history is an indication that a credit card holder or a borrowing customer needs to be cautioned. Given that credit scores are increasingly being looked at as a measure of the creditworthiness of an individual, maintaining them at a decent level becomes imperative. Whether it is a new credit card you are applying for, a loan, insurance or even a job sometimes, your credit history might be checked to find out more about you and your habits. Here are some of the habits, which can quickly ruin your credit and should be guarded against.
Multiple credit applications
The more you seek credit, the more it will show that you are desperate for credit. It is always advisable to keep your credit cards to a minimum. If you keep applying for credit cards every now and then, it will be recorded on your history and give a bad impression to companies when they check with the credit bureaus. One card account is more than good enough to manage and develop a good credit history.
Leaving outstanding balances month after month
The rule of thumb is to always pay down your balances in full, every month. The moment you leave your outstanding balance for the next month, you are making it more difficult for yourself.
Late payment is an indication of inconsistency, and hence your credit history. If you do this often, the credit card issuer can penalize you by raising the interest rate, making it even more difficult for you to pay it back. The other problem is that you are unnecessarily adding to your principal debt, in the form of interest and late fees. If you don't think you can make the payment in full, by the end of the month, you should not charge it on your credit card.
Missing bill payment deadlines
Missing too many bill payment deadlines when you had the money to pay them is really foolish to say the least. Procrastination is a bad idea and you would be doing yourself a favour if you manage to pay back your debt before the due date.
Defaulting on loans
Defaulting on your loans could really hurt your credit history. Doing it once is bad enough. Doing it more than once, is just not the right way to go about the credit which has been made available to you. This will really turn off your creditors, making you a highly risky bet. The interest rates you will be charged either by your current debtor or in future applications will also be sky high.
Balance transferring very often
You can do the odd balance transfer when you have a really good deal. But going for balance transfer way too often and switching cards, sends negative vibes about you to the credit card companies and other lenders. Credit issuing companies want customers who are loyal, not someone, who keeps transferring debts from one account to another. If you are closing the old card accounts, it will hurt your history even more.