avoid-these-credit-score-killers

Parenting adult children.

I can’t believe I’m actually typing that, but reality has hit. While our baby girl still has six years before she leaves for college, our eldest son is officially an adult, as in, on his own and managing incredibly well without us adult.

You may recall from my “Whirlwind of a Summer” post that he graduated from college in May and has since moved far away from his NC abode into a downtown Chicago apartment. It’s such a fun, yet different, relationship we are building and I love it. I’m sad because I’ve reached a whole new level of missing our three sons, but my heart can’t help but celebrate how well our eldest is doing. If you follow me on Instagram, you know that he’s crushing the meal planning skills better than most moms I know, he’s followed my grocery advice on shopping at Aldi, our phone calls include cooking dialogue, as well as his budgeting like a baller updates. Although he has declared that “produce is a budget buster.” Yes, dear son, it is, but you need those greens.

Downtown living is something every single bachelor can enjoy, yet big city living is not for the faint of heart. His monthly rent is more than our house mortgage, which mortifies this frugal momma and after three months, he’s still sleeping on an air mattress. (Oh, to be young again and not have access to a vehicle to furniture shop and not even care a bit.) But his downtown view and location? Unbelievable! It’s always about location (until that wind starts whipping off Lake Michigan and he experiences the lake effect. Brrr!) 😉

A few months ago, one of his calls included “need to know” information about a good credit score, including his own. He looked it up, you can do it for free thanks to Discover Credit Scorecard and wanted it to fall in the good score (range 670 – 739 on an 850 point scale.) As someone who has written about debt-free living for years, my rub between needing/wanting a good credit score and our desire to be completely debt free (which then completely drops your credit score) has routinely been a topic of conversation.

While I’d love to live in a world where everyone can pay for college with cash (I’ve written about that here), graduate with no debt, and then go on to buy their car, house and all amenities with cash, that’s not a reality for most Americans.

The reality for our 22-year-old son is that a good credit score matters.

The reality for you is that your credit score matters A LOT!

In fact, your credit score can be one of your most valuable assets since it plays an important role in your financial future.

Without good credit, approval for your first apartment may not occur (yes, the landlord checked their credit score before approving the rental), let alone receive a mortgage for your first home. It drastically affects the rate of interest you pay on nearly all your loans because the better ones credit score, the less interest you will have to pay.  A poor credit score means either no loan approval or one that you might not want to take due to the insane amount of interests accrued. 

Our son still begrudges the fact we wouldn’t co-sign his student loan (yes, part of our “skin in the game mentality” that I wrote about in “Paying cash for college”) and therefore his loan rate was higher due to his credit score.  Last week a random text showed up in our family text group.

All it said was, “My credit score is 746. Excellent.” He hadn’t let go of that conversation and was able to determine his credit score easily and in minutes. You can do that right here.

I’m so proud of him for being conscientious about this, but I also want him to avoid future mistakes.

have-you-checked-your-credit-score-lately

Here are some of the most critical Credit Score Killers:

  1. Making Late Payments

Hands down, this is the worst way to kill your credit score and the most noted. Lenders want to be assured that you are responsible enough to repay your debts on time and if you cannot, it hurts you every time. Here’s the hard part to swallow: not only does it hurt your credit, but it’s cash out of your pocket. The interest on late payments adds up to a lot of extra cash. If you can’t pay your debt on time, every time and in full, you should not be borrowing money. Only one or two missed payments can affect credit score and if it continues to be a pattern, especially if it’s consumer debt (i.e. things you don’t “need but want,” stop using credit until you can get your spending and payments under control.      

     2.  Applying for a lot of Credit

The poor Walmart cashier had no idea what he was in for when he kept pushing me to sign up for their credit card. Typically, I just turn the offers down and go on my merry way, but this time, I couldn’t let it go. We already had been having an enjoyable conversation before the offer, but now he ended up on the receiving end of a five minute financial health discussion. At the end he actually mentioned, “Wow, I didn’t know any of that. That was interesting.” If you take “advantage” of all those “sign up for our credit card at checkout and receive 15% off this purchase” offers, it may damage your credit score, not to mention the temptation to buy more than you need. One or two general purpose credit cards are all that you need, but only if you charge what you pay off each month.         

     3. Racking up Credit Card Debt

I’ve written about this for years and I this is critical to financial health.  Search my archives for more detailed advice. While those who use credit cards responsibly can benefit from an increased credit score,  many Americans are in debt and do not have the income to pay their balance in full and on time.  If this happens, opening another form of credit is not the answer. Spending below one’s means is the solution.      

     4. Not Keeping an Eye on Your Credit

This is an easy one to overlook, especially when we’re in a hurry. Just like it’s critical to look over your credit card and bill statements to make sure there are no monthly errors, it’s even more important to check your credit report annually.

The Federal Trade Commission reports that 1 in 5 consumers have errors on at least one of their three major credit reports. If a mistake it caught, immediately look into the problem. A friend of ours was horrified to find out that her identify was stolen, which grossly affected her credit score. She found that out in an annual credit score check.  Discover’s new Credit Scorecard provides your FICO® Credit Score for free along with a personalized credit profile highlighting some of the components that make up your score. Anyone can access Credit Scorecard even if they are not a Discover customer. It’s important to get a baseline by regularly checking your credit score and doing a comprehensive check of your credit report annually. 

Phew – that’s a lot of information and it all stemmed from our son’s phone call.

Have I told you parenting adult children is exhausting? 😉

This is a sponsored conversation written by me on behalf of Discover Financial Services. The opinions and text are all mine.

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