Posted on: December 31, 2016

Want a High Credit Score? Avoid these Common Mistakes

Want High Credit Score

Today , having a high credit score is considered essential in order to get new credit and many people put a lot of effort in managing their scores in a better way. However, many times, willingly or unwillingly, we make mistakes that can negatively impact our credit score. Even worse, in many cases, we do not even realise that we have made these mistakes and tend to repeat them over and over again. The following is a short list of avoidable yet common mistakes that we should attempt to avoid going forward.  

Late Payments

Many of us do not realize that our payment history can significantly affect their credit score. Every bank or lender provides a due date for making payments of credit card dues and loan EMIs but they also provide a grace period before which the late fees is levied. This is where people often make a mistake. A payment made after the due date is considered as a late payment and these show up on your credit report leading to an adverse effect on your credit score. So, the simple way out is to make sure your credit card bills and loan EMIs are paid on time.

Large Amount of Debt


Sometimes due to lifestyle inflation, we find ourselves managing too many loans simultaneously. For instance, suppose you are repaying your home loan along with your car loan and a personal loan. Having multiple loans simultaneously causes your credit score to plummet due to a high debt to credit ratio.  In such cases if you attempt to get additional credit, your credit report will show that you are a credit-hungry individual. Similarly if you have multiple credit cards and have been regularly using over 50% of your available credit limit across all cards, your credit score will plummet due to the same reason.

Settling a Loan or Credit Card Dues

As part of a loan settlement, lenders will agree to consider a loan paid off for an amount lower than actual due amount. For banks settling is usually the last resort opted for by lenders or banks as they feel that otherwise you would default on the loan. The remaining amount is called ‘deficiency balance’ and it is reported as a loss on the lender’s books. It may seem beneficial at first that you did not have to pay the full amount but credit score algorithms count it as a negative item and decrease your score significantly. A loan settlement will stay on your credit report and produce an adverse impact on your credit score for the next 5-7 years.

Applying for Multiple Loans/Credit Simultaneously

When seeking a new loan or credit card, doing your research and comparing multiple options before selecting the one that works for you is definitely a good idea. However, filling out and submitting multiple credit card or loan applications simultaneously is definitely NOT a good idea. These applications will all appear on your credit report along with the dates when these checks were made. In case these dates are close to each other, it will give the impression that you are a credit hungry individual. Lenders tend to reject new credit applications made by credit-hungry individuals and when your application for a loan or credit card is rejected, your credit score witnesses a drop.


The points mentioned above are only a few among many of the common mistakes that borrowers make. Avoiding these will definitely help you maintain and increase your credit score in a more consistent manner.

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