Maintaining a good credit score can help when you need a new loan. A high score is an indication to lenders that you can responsibly manage debt. It could result in you earning a better rate on a loan or improving your chances of being approved in the first place.

If your credit score drops, it could be difficult to build it back up. That’s why keeping your credit health in good shape is so important. To prevent unexpected dips in your score, it’s best to avoid these actions:

1. Forgetting to pay your bill on time.

The single most important factor in determining your credit score is your payment history. Too many missed payments will almost certainly bring your score down significantly, and even a single missed or late payment can hurt. If you have a habit of forgetting due dates, there are a couple of precautions you can take.

Automatic payments.

Some companies offer an autopay option, or you can set up recurring bill payments through your credit union or bank on a certain date each month. The trick is making sure that the account from which the payment will be drawn has enough money to cover the full amount of each bill payment, which can be more complicated if the monthly payment amount varies―for example, with a utility bill as opposed to your mortgage payment. Regularly check your balance and closely monitor the amount due each month.

It’s important to be aware that autopay can hurt your credit score if you use a credit card as the payment source and forget that you’re adding to your debt each month. It can be easy to lose track of such payments, and if you aren’t monitoring and paying off your credit card balance in full, your credit utilization ratio could quickly increase.

Calendar reminders.

Another trick is to set calendar alerts on a mobile device or mark the due date on a physical calendar. A simple reminder can help immensely. If you want to be extra cautious, you may decide to not only set up automatic bill payments but also use your calendar alerts as a reminder.

2. Paying less than the minimum amount due.

Many bills require a minimum payment if you can’t arrange to pay the debt in full. It’s always best to pay off your monthly bill in its entirety if you can afford to do so, or at least as much as you can. However, if you pay less than the minimum amount required, the creditor may consider it a missed or late payment. In addition to damaging your credit score, paying less than the minimum amount due could result in added late fees and compounding interest on your account.

3. Taking out too many credit cards.

Having a credit card can help you build your credit score, but taking out too many—especially in a short time frame—can have a negative impact.

You may receive credit card offers in the mail, or a cashier at your favorite department store may suggest taking one out at the register as a way to save money. In some cases, taking these offers can be beneficial, but not always. Only take out a new credit card if it makes sense in the long term. If you shop at that department store frequently, the branded card might be worthwhile. Likewise, if you were already considering getting a new credit card or the offer has a perk that would definitely benefit you, following up on the offer could be advantageous.

However, if you take out multiple cards within a short timeframe, it could result in numerous hard inquiries and will reduce the average age of your credit. Both of these can lower your score, and it can take some time to recover. For instance, a hard inquiry stays on your credit history for two years.

So, how many cards are too many?

There’s no single right answer to this question because every person’s situation is different. The key isn’t how many cards you have but whether you can keep up with the payments on all of them. If you feel overwhelmed, either by the number of credit card bills you have to pay or the amount you’re paying each month, it may be time to rethink your approach to credit card debt and consider options such as a balance transfer to consolidate your debt. A good guideline to follow is to only apply for credit that you need, plan to use, and are able to repay.

4. Closing accounts that you don’t need.

Creditors like to see that you have experience managing debt, which is why the average age of your credit accounts is so important. If you close an account you’ve had for years, it could lower the average age of your credit history, making it appear like you have less financial experience.

Closing out a credit card will also impact your credit utilization rate. Let’s say you have two credit cards, each with a spending limit of $10,000. One has a zero balance, and the other has a $6,000 debt. With a combined credit limit of $20,000 with a $6,000 balance, you have a 30 percent utilization rate. If you close the zero-balance card, your utilization rate will suddenly jump to 60 percent.

It may be tempting to close an account that you’ve had trouble with in the past—perhaps you’ve missed multiple payments or it has been sent to collections—but the negative marks will usually remain on your credit report for seven years, even after the card is canceled. It may be better to leave the account open but unused.

5. Racking up a huge credit card bill.

Credit utilization is also a significant factor in determining your credit score. This ratio compares how much credit you can access and how much you actually use. If you have a credit card with a limit of $10,000 and you have a balance of $6,000, you have a credit utilization rate of 60 percent.

In general, your credit utilization rate should be 30 percent or lower. If your utilization rate is a little bit higher than this, you don’t have to panic. Various circumstances may call for you to put a larger amount on a credit card, such as if you take out a card to make a large purchase that you plan to pay off over time. Additionally, if you have multiple lines of credit, the utilization score calculation typically factors in all of them to reach an average.

If you have a high credit utilization rate, it’s important to have a plan to lower it. It’s usually best to avoid adding new credit lines just to lower your credit utilization rate―creating a budget you can stick to is a better strategy. Nevertheless, there are some cases where new credit lines can help, especially if you find a balance transfer offer that helps you aggressively pay down your overall balance without increasing your overall spending.

6. Applying for multiple types of credit at once.

When you apply for a loan or credit card, the financial institution you’re working with will do a hard inquiry or hard pull on your credit. Doing so gives them access to your credit score and credit report so they can make sure you meet their lending requirements.

Hard inquiries also signal to other creditors that you’ve applied for new credit. Why does this matter? Lenders are generally wary of consumers who attempt to access a lot of new credit quickly. Without time to get accustomed to new monthly expenses, it’s hard to tell whether the consumer can handle additional debt.

Note that the key phrase is “multiple types of credit,” as in you’re applying for credit cards, personal loans, auto loans, all at once. If you have multiple hard inquiries for the same type of loan, such as an auto loan, that will likely be treated by the credit bureaus as a single hard inquiry on your credit, as you are likely being responsible and looking for the best rate possible.

To minimize hard inquiries, only apply for the credit that you need. Additionally, try not to make too many major purchases simultaneously that would require separate lines of credit. For example, if you recently took out a mortgage, try to avoid buying a new car. It’s even more important not to attempt to open new lines of credit while you’re buying a home, as this has the potential to impact your home purchase.

7. Staying away from credit altogether.

There are many factors that influence your credit score. For some people, it may be tempting to just stay away from credit altogether. This strategy can actually work against you. Avoiding credit cards and other loans will result in a sparse credit history, and lenders typically like to see proof that you can manage credit before they offer you a loan. One of the best ways to prove your creditworthiness is by showing that you can manage a diverse credit profile. As long as you use credit responsibly and with a manageable budget, using credit will help you secure your financial well-being.

Maintaining and growing your credit profile.

Maintaining a good credit score comes down to a few simple rules:

• Make payments on time and in full
• Keep your balances low
• Consider what you can afford
• Keep old accounts open when possible
• Only take out credit when you need it

Are you in the market for a new line of credit? Whether you’re expanding your credit portfolio, beginning to build your credit history, or just would like some advice, OnPoint can help. Reach out or apply online to learn about our loan options.