credit score

A healthy credit score is essential if you want to get the best rates when you take out a home loan, finance a car, or borrow money for any reason. Unfortunately, your credit is one area where what you don't know can hurt you. If you don't keep a watchful eye on your credit, small credit mistakes can whittle away at your score over time. This is especially true if you don't know exactly where your credit score comes from. That's why it's crucial to gain an understanding of how credit scores are determined and how your daily credit activities could be boosting – or hurting – your score without realizing it. 5 Ways You May Be Hurting Your Score Here are five seemingly harmless moves that can hurt your score over time if you're not careful: #1 Paying Bills Late Although paying a bill a few days after your due date might not seem like a big deal, this practice can actively wreck your credit score over time. VantageScore 3.0, which is the credit score estimate Lending Tree gives out for free, relies on your payment history as the biggest influencer of your credit score – good or bad. If you're constantly paying bills late, your score will show it. If you don't want late payments to affect your score, try marking your calendar with your due date or setting your bills up on auto-pay. #2 Using Too Much of Your Open Credit Another important factor that makes up your credit score is your credit utilization, which is the amount of money you owe (reflected as a percentage) in relation to your credit limits. Because utilization carries so much weight, carrying a huge balance on a card with a relatively low credit limit can knock your score down a peg or two – even if you're paying all of your bills on time. To cut down on the impact, you should pay down your credit cards frequently and limit any balances you carry month-to-month. Many experts say you should keep credit utilization below 30 percent across all of your accounts. #3 Opening New Accounts Too Often