5 Honest Mistakes That Can Wreck Your Credit

In the world of personal finance, “the little things” aren’t so little. Overlooking a small bill, failing to pay a fee, forgetting about a credit card you rarely use — all these things can have serious consequences for your credit, which could hurt you when you go for “the big things,” like a new car or buying a home.

It’s not like you’re being careless or aren’t concerned about your finances. Mess-ups happen to everyone, but a few cases of forgetfulness can add up, causing serious credit damage. Here are five honest mistakes you want to avoid as you work on improving your finances this year.

1. Forgetting About That Credit Card You Just Opened

A lot of people get new credit cards during the holiday shopping season, often retail cards you opened at a store. Because you’re not used to having an extra bill, it’s easy to forget to pay it, but missing credit card payments will hurt your credit score. If it’s a one-time thing, it won’t cause long-term credit damage, but multiple missed payments will.

The same thing often happens when you charge something to a credit card you rarely use. If it’s not on an automatic payment, you might not remember when it’s due. Make a note in your calendar, or whatever way you choose to remember, to check for new and infrequent statements.

2. Assuming an Automatic Payment Is Going Through

Speaking of automatic payments, you need to check up on them from time to time. When you first set them up, you should make a reminder to check your accounts on the day the bill is due, because it sometimes takes a few billing periods for automatic payments to kick in.

After that, don’t forget to check it’s still working. If you get a new credit card and forget to update payment information for your utilities, you might end up with late fees, service interruptions or a bill that goes to a debt collector. If it’s an automatic payment for a debt, you could face similarly dire consequences.

3. Thinking You Made a Payment But Didn’t

You should make a habit of checking your bank accounts daily to watch for unauthorized activity, but this also comes in handy when confirming you’ve paid your bills. If you’re sending a payment through the mail, there’s always a chance it could get lost. When making online payments, you might have thought you paid but forgot to confirm the transaction, or it just didn’t go through for some reason.

If you have joint finances with a spouse or partner, you need to communicate about paying bills. It’s not uncommon for both spouses to think the other has paid a bill, or one person isn’t being honest about financial difficulties preventing you from keeping your accounts current.

4. Missing a Bill Notice

Account statements, whether paper or electronic, are easy to overlook. They get lumped in with other mail, sometimes junk mail, and if you’re not careful, you might discard something important. This is especially true when you’re billed for something irregularly. For example, you may pay your homeowners association fees once a year. If you miss the letter with your HOA bill on it, you could easily forget to pay it and get sent to a debt collector or even put your home in jeopardy because of it. Make sure you’re monitoring your mail and email for bills and if you know you have a habit of misplacing bills, make a filing system to help you stay organized.

5. Assuming Your Insurance Is Covering a Medical Bill

A lot of people find medical billing and health insurance confusing (it often is). When you get summaries from your insurance company and bills from your doctor, read them carefully, save the paperwork, and call your insurance or healthcare provider with any questions. Medical bills may be quickly turned over to debt collectors, which can hurt your credit, not to mention become a huge pain to resolve.

Perhaps you’ve sensed a theme: You have to be somewhat organized to protect your credit from unnecessary damage. If that’s not a quality you naturally possess, it’s crucial you figure out a way to make it work for you. There are free budgeting programs online that send you bill alerts, and you can also set them up with most of the companies you need to pay regularly. Sticky notes, a white board on your fridge, calendar reminders — whatever it takes, stay on top of the little things. Also keep an eye on the big picture — that is, your credit. Check your free annual credit reports for any issues or mistakes that need to be addressed, and keep an eye on your credit score to track your progress. You can get two of your credit scores and a summary of your credit reports for free on Credit.com.