1. Missing or Skipping a Payment

Timeliness and consistency with loan payments account for 35% of your credit score. This makes missing or skipping payments one of the most important money mistakes to avoid.

2. Late Payments

While not as harmful to your credit as missing or skipping a payment altogether, late payments are also within that category that has a 35% impact on your credit score. Set reminders, use online autopay, or do whatever you have to to pay at least the minimum amount due on time, every time.

3. Not Comparison Shopping for Loans

Loans from different lenders can have very different terms and interest rates. Don’t just settle for the first credit card offer, auto loan, or personal loan opportunity you find. Comparison shop to ensure you get the repayment terms you are looking for as well as the lowest interest rate possible.

4. Borrowing Too Much

Just because you are approved for a certain loan amount does not mean you should take it on. Have a realistic look at how much you can truly afford in terms of home price, car price, or any item you are looking to finance.

5. Not Having Emergency Funds in Savings

Many people tend to think they are immune from a financial crisis, or they just don’t think it could happen to them. However, having a safety net for an unexpected bill can be a financial lifesaver. While recommendations vary, having a minimum of three month’s salary in a savings account (more if possible) is ideal.

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6. Not Looking for or Taking Advantage of Refinancing Opportunities

Another all too common financial mistake people make is, once they have gotten a loan, they never refinance. Keeping your eyes open to refinancing opportunities can help with landing a lower interest rate and better terms on the loan. This can be especially beneficial with home loans and student loans.

7. Not Optimizing Your Credit Utilization Ratio

Many people don’t even know what credit utilization is, let alone how to optimize it. However, it accounts for a full 30%of your credit score. This term refers to the amount you have borrowed versus your available credit. Keeping your debt amount at no greater than 25 to 30%is ideal – the lower, the better.

8. Not Having a Mix of Credit Accounts

This tip refers to having a variety of different loan types, instead of, for example, all credit cards. Having one or two credit cards along with a student loan and a personal loan (with ideal credit utilization) is much more positive for your credit score.

9. Borrowing from Retirement Accounts

It can be tempting to borrow from retirement accounts to repay debts or if a financial crisis strikes. However, this can result in penalties, taxes, and a blow to your retirement security if you are unable to pay it back.

10. Not Consolidating High-Interest Debt with a Personal Loan

While ideally, you should not be running up your credit cards, but if you do, a personal loan may help dramatically with reducing the stress and financial burden. You may be able to negotiate lower payments as well as a much lower interest rate.

Financial success is as much about knowing what to avoid as it is about what you should be doing. Use this list as a guide for avoiding many of the pitfalls that can stand in the way of your best financial outcomes.

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