Credit Cards: 10 Absolutey Terrible Mistakes

Don't make mistakes when it comes to your credit—and read these 10 Absolutely Terrible Mistakes so you can find out just what to avoid. Your credit score has a huge impact on your ability to be able to buy a house, a car, or get credit.

1. Late Payments: 35 percent of your score is made up of your payment history. Make a payment that is 30 days late and it stays on your report for up to 7 years. Payments that are 60 days late, 90 days late or more also stay on your report for up to 7 years and drag down your report.
2. Bankruptcy or Foreclosure: Both of these black marks stay on your credit report for 10 years. Even after they are off of your report, most lenders ask if you have ever declared bankruptcy, and it is fraud if you lie to get a loan, so you have to be honest. Do all you can to avoid this, including trying to settle with creditors or negotiating debts.
3. Maxing Out Cards: In addition to costing you a fortune in interest, maxing out cards can hurt your credit. 30 percent of your score is comprised of your debt to credit ratio. The more of your credit you use, the lower this factor will be.
4. Closing Old Accounts: 15 percent of your credit score is made up of the average age of your credit history. If you close old accounts, you shorten the age of your credit report. You also lose open credit, hurting your debt to credit ratio.
5. Applying for Lots of Cards: 10 percent of your credit score is made up of the number of inquiries listed. Every time you apply for a new account, you get a new inquiry. Lots of inquiries signifies to lenders that you are getting ready to go on a spending spree, or living above your means. Avoid this by declining to open that store card to save 10 percent at the register—it will cost you a lot more in the long run.
6. Applying for No Cards: You need to have some credit to have a credit history. Even if you apply for only one or two cards and just charge a pack of gum on them each month, make sure you do this to start building credit history.
7. Co-signing: Co-signing is almost always a terrible decision. It may seem as if you are helping out a friend or family member, but you become responsible for the debt that they take on. If they don't pay, your credit can get trashed in the process. You may believe they are going to pay, but remember—the bank accesses risk for a living and they have asked for a cosigner for a reason.
8. Making Only Minimum Payments: If you make only the minimum payments on your credit cards, you will be paying off debt for years. In many cases, you will end up paying much more in interest than the original items cost.
9. Not Reading the Fine Print: Some cards contain clauses that stipulate that your interest rate will rise if you are late or default. Others contain details about what happens if you make late payments. If you don't read the fine print, you may not understand exactly what can trigger a rise in interest rate, or penalties or fees. Know the details of your card so you can be aware of what you agree to.
10. Taking Cash Advances: This is almost always a terrible idea. The interest rate is much higher than for purchases and in most cases, it is extremely costly to take a cash advance. While this option is better than payday loans, look into other ways to borrow money—including a personal loan from the bank—before you resort to a cash advance.