The Worst Credit Score Nightmares Begin with These Mistakes

Some of the worst credit score nightmares actually start out with deceptively simple mistakes. Things progress from bad to worse more often than happening suddenly.

The kinds of black marks that can remain on your credit score for seven years can actually have much longer time horizons than that. They often start as simple late payments and then become deeper problems like delinquencies, described in terms of 30, 60, and 90 days.

After that, credit card accounts and unpaid medical bills tend to go to collections agencies, while bad loans and unpaid tax debts become defaults headed for court activity — like liens, wage garnishment and foreclosure. And let’s not forget the bankruptcy you file yourself: It takes a while to work its way through the courts, but there’s years of buildup that starts with all those overdue balances.

When courts get involved, that can easily tack a year onto any of the worst credit score nightmares. It ends up dragging the time horizon of your bad credit score beyond seven years because the creditors all report information to the credit agencies on a monthly basis — every month, tacking on more interest.

Here comes an important lesson in how to build credit scores: Watch out for the following things that can make you vulnerable to problems that can escalate into real headaches.

Not Checking Your Credit Reports

Your credit reports are your first line of defense — or offense, if need be — and the key to spotting trouble before it can do any damage.

Checking your credit report regularly will let you know if anything is amiss — from a credit check you didn’t authorize to an account you didn’t open, or even blatant signs of identity theft, you’ll be able to spot it as soon as it happens if you’re regularly looking at your report.

Related to this, if you do see anything suspicious on your report, a quick way to nip potential identity theft in the bud is to put a fraud alert on all your accounts.

If you only qualify for a temporary alert, set a reminder on your calendar of when to renew the alert and do so – keep renewing until you get a permanent alert or the problem is completely fixed.

Not Paying on Time

This one might seem obvious but it’s how a lot of trouble starts: You miss the due date for a payment. It might not seem like a big deal, but once you miss the due date, interest starts to accrue on your balance.

Let it go without paying more than the minimum and this starts to snowball toward an amount that’s greater than what you can afford to clear up in a single payment. Keep it up and late becomes delinquent, and then the longer you leave that account unpaid, the harder it becomes to turn around.

Worst of all: blowing off a creditor altogether — most likely the company will keep charging you interest indefinitely, dragging out the time the bad news stays on your credit report indefinitely.

Unless you negotiate a settlement agreement as part of paying them off, you’ll be paying interest until the very last payment. And only when it’s all paid off do you get to start counting down from seven years until it’s finally gone from your credit report.

All you need to do to prevent this avalanche is resolve to do the opposite: pay on time. Better, yet, pay early. Or pay often.

Not Investigating New Roommates

Use the same level of due diligence on prospective roommates that you would if you were originating a new lease. Actually, you should create a written agreement for all new roomies to sign before you allow them to move in.

But let’s back up to why you need to find out the rental histories and credit scores of anyone you’re considering as a possible roommate.

You’re letting them live with you and if they’re late on rent you might have trouble getting the right amount of money to the landlord — or your bank if you’re a homeowner.

If things go south with your roomie, you’re going to be stuck with him or her for a while before you’ll be able to get them out. In the meantime, your own housing situation might be jeopardized and that might

So ask prospective roommates for references from past roommates and landlords, verify their employment and income, and ask them for their social security number so you can obtain their credit score. Do everything you can to research confirm the details of someone’s housing history before you let them move in.

Insurance Gaps

All too many people fall into this particular sand trap without realizing it sets them up for long-term credit problems — and while gaps in any kind of insurance can lead to trouble, more people seem to run into credit trouble that begins emanating from medical bills.

These problems tend to begin in two categories: large deductibles and time between jobs. Both introduce the possibility that you might have to pay fout of pocket and find yourself surprised by how expensive it gets.

Most people accept a new job without learning ahead of time whether their insurance coverage will begin right away or after a probationary period. Only a small minority of employers start insuring new hires the moment they set foot in the door. Yet upon learning the price of COBRA can easily cost at least $800 a month to tide you over until the new insurance kicks in, the temptation to forego this pricey coverage is understandable.

But it’s a mistake that can wind up costing far more than the COBRA premium if you wind up in the hospital or some other medical emergency bills you out of pocket for a small fortune. It adds insult to injury if you neglect to pay the bill– even if you disagree with whether you should have to pay the debt, you still owe money on it. The creditor will continue to hold you responsible and may charge interest on the account as time wears on. After 90 days, that unpaid bill could go to a collection agency and do further damage to your credit.

The same general pattern can result from choosing an insurance plan that has a large deductible — the lower the premium, the more you have to pay out of pocket. This could easily amount to a four-digit bill. This makes it worthwhile to consider paying higher premiums so you can have a lower deductible on your insurance.

Travel to New Locations

Of course, you want to relax on vacation, especially when you leave the country or go somewhere exotic. But anytime you travel somewhere new, don’t take for granted that you can trust every single merchant you encounter — especially when you go overseas.

It’s worth the added effort to get travelers checks — or a stored value card for travel. This will save you from the headache of having your payment details stolen while you’re away from home. If you do bring your bank or credit card, try to limit use of it to locations within banks and brand name merchants you trust. Make use of the hotel safe and keep your cards on your person.

Speaking of being away from home, when thieves learn you’re not there, you become more susceptible to robberies — even if your place has physical security preventing break-ins, your trash or recycling bins might be easier for n’er-do-wells to explore when you’re not there.

Don’t post on social media that you’ll be away from home — wait until you get back to post photos of your trip. Budget for a housesitter who can take in your mail and possibly turn lights on and off to make it look like you’re there.

Cosigning Loved Ones

You may mean well helping out a loved one, but make sure you know the full extent of your responsibilities on any account before agreeing to cosign for anyone.

If that person falls upon hard times and can’t pay the bill, you are liable for it. Do some careful math about before agreeing to any cosigning: If you can’t afford the amount of the monthly payment on the loan, credit card, or rent in addition to your own expenses, don’t cosign.

You never know what might happen in the future, but if someone you cosign defaults on their account, it becomes your problem — your credit score will go down with theirs.

Joint Accounts and Divorce

It makes perfect sense to get joint accounts with your spouse when everything’s going well, but once things go bad, that’s another story. When tensions rise, the intention to make things work can blind one or the other spouse to the need to separate finances before it’s too late.

Better safe than sorry in this case means maintaining separate finances all the way through a relationship and marriage, but that might not be realistic if one person in the couple has stronger finances than the other.

Of course, once you have a joint account with a partner, subsequently deciding to separate finances can create strife within the relationship. That’s no reason to leave your name on a joint account that could get maxxed out once you ask for a divorce or breakup. Find a middle ground and for a tactful way to exit any shared financial arrangements before it’s too late — this can lead you toward some of the worst credit score nightmares, like foreclosures and bankruptcies.

Lax Security

Do you use the same password for every single site you visit? Or are any of your passwords based on something that could easily guess?

You might use a single login application that saves all of your passwords in one place, but if you pick the wrong app for this and it gets hacked — this has happened to a few of them — then you’re out of luck.

Write down all your passwords on paper and then you might be vulnerable if anyone comes over to visit and sees what you wrote down. Unless you’re a complete hermit, keeping a hard copy of your password might not be a good idea. Try to memorize your passwords instead, using mnemonic devices for different sites.

Speaking of paper, another area of weakness might come from not shredding papers with identifying information on them before putting them out for recycling. Going paperless will eliminate this vulnerability but then you need to make sure your online practices are solid.

Make a point of embracing best practices for security and you protect yourself from identity theft — which can require a lot of work to recover from. Even though credit bureaus and financial institutions are pretty receptive to helping victims, the problem won’t go away on its own.

The Worst Credit Score Nightmares Often Start with Laziness

All of the bad scenarios described in this article seem to have laziness as a common accelerant of problems. exacerbator of problems.

Either you’re too lazy to check your credit report, or you’re too lazy to pay your bill on time, or you’re too lazy to make sure your personal information is secure, or you’re too lazy to remember to read the fine print before agreeing to co-sign an account.

Whatever it is you neglected to do that got you into your last financial pinch, try ti make a lesson out of it and resolve not to let laziness interfere with your good credit.

How many of the items mentioned in this article sound familiar to you, readers? Please let us know your experiences with them by posting in the comments section beneath this article.