A credit score is a numerical measure of a person’s creditworthiness. Lenders use it to determine the likelihood that an applicant will repay their debt on time.

The higher the credit score, the better the interest rate and lending terms offered. It also means it will be easier to obtain credit. However, certain financial decisions can hurt one’s credit score. Here are some and how to prevent the mistakes.

6 Financial Decisions That Can Infringe Your Credit Score

Below are the 6 financial decisions that can hurt your credit score:

1. Missing Credit Card Payments

Late or missing credit card payments can damage your credit score. Late payments are noted when lenders report to the credit bureaus. To prevent this, set up a payment reminder system, such as an auto-pay with your bank or credit card issuer. Additionally, review your credit card statements regularly to ensure that all payments are on time. Make more than the minimum payment to improve your credit score rise in the fastest way possible.

2. Maxing Out Your Credit Cards

Maxing out your credit cards indicates to potential lenders that you are a riskier client. Keep the credit limit under 30 percent. Also, applying for multiple credit cards in a short period can lower the score. Applying for a card creates a hard inquiry (or “hit”) on your credit reports.

Too many hard inquiries make it appear like you are trying to take on too much debt, lowering your score. To avoid this, limit the number of credit cards you apply for and space out your applications over time. Also, note that a long clean credit history is essential to your credit score. Keep your oldest accounts active. Only close them when it’s necessary.

3. Not Paying Your Bills on Time

Paying your bills on time, whether the utilities or cell phones, maintains a good credit score. Late payments can lead to penalties, damaging your credit score. Set up automatic payments or reminders with your bank, and have enough money in the account to cover all the bills when they are due. 

4. Not Knowing Your Limits

Know your spending and borrowing limits determined by your income level and debt-to-income ratio. Keep your debt-to-income ratio low and only borrow what you can realistically afford to repay to maintain a good credit score. You might have to look for multiple sources of income and make budgeting a priority to manage this.

5. Not Reviewing Your Credit Report

Review your credit report regularly. It will enable you to identify any errors or mistakes dragging down your score. You can check for free once a year on AnnualCreditReport.com or purchase a copy from one of the three major credit bureaus. Note any errors or discrepancies and contact the appropriate bureau to fix them.

6. A Good Score is a Progressive Effort

As you take steps to improve and maintain your credit score, remember that it takes time to build good credit. Every little effort helps and will eventually lead to a better credit score. Keep checking and take note of hard inquiries and other activities that may have an impact. If possible, consult experts when in doubt.