Financial success is as much about knowing what not to do as it is about knowing what to do. Use this list as a guide to avoid some common pitfalls that could prevent you from taking control of your finances.

1. Missing or Skipping a Payment
Timeliness and consistency with loan payments account for 35% of your credit score. Therefore, missing or skipping payments can be crucial money mistakes to avoid.
2. Late Payments
While not as harmful to your credit as missing or skipping payments 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 do in order to pay at least the minimum amount due. Try your best to make your payments on time every month.
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3. Not Comparing Different Loan Options
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 you find. Compare and shop for different loans to ensure you get the repayment terms you are looking for as well as the lowest interest rate possible.
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4. Borrowing Too Much
Just because you are approved for a certain loan amount doesn’t mean you should take it. Take a realistic look at how much you can truly afford for a home purchase, car purchase, or any item you are looking to finance.
5. Not Having an Emergency Fund
Nobody is immune to having a financial crisis. Emergencies can happen to you at any time, and it’s important to be prepared so that a rough patch doesn’t lead to financial devastation. Having a safety net for an unexpected bill can be a financial lifesaver. While recommendations vary, having a minimum of three months’ salary in a savings account is ideal.
6. Not Taking Advantage of Refinancing Opportunities
Another all too common financial mistake is to not look into refinancing. Keeping your eyes open for refinance opportunities can potentially help you land a lower interest rate and better terms on a loan. Refinancing can be especially beneficial when it comes to 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 borrowing below 30% of your available credit is ideal.
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8. Not Having a Mix of Different Types of Credit
This tip refers to having a variety of different loan types, instead of, for example, having only credit cards. Diversifying your credit between one or two credit cards, student loans, and a personal loan (with ideal credit utilization) is much more beneficial to your credit score.
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9. Borrowing from Retirement Accounts
It may be tempting to borrow from a retirement account in order to pay off debt or cover expenses during a financial hardship. However, borrowing from a retirement account can result in penalties, taxes, and a big blow to your retirement plans. Avoid this financial decision if you can.

10. Not Consolidating High Interest Debt with a Personal Loan
Ideally, you should not be running up debt on your credit cards; however, in the event that you do, a personal loan can dramatically help relieve some of the stress and financial burden. You may be able to negotiate lower payments as well as a lower interest rate, so this form of debt consolidation may be worth it to you.
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