Though the U.S. financial climate has improved significantly over the last few years, many individuals are still struggling to repair their damaged credit from the height of the great recession. It can take years to get your credit back on track after a few big screw-ups, and even longer than that if you’ve had to declare bankruptcy.

Even if you’re taking steps to improve your credit, you might unknowingly be sabotaging your own efforts by making one of these six mistakes. Read on to make sure you’re not falling into a hidden credit trap.

Not Setting a Budget

Without a game plan for what you’re spending each month, how can you possibly spot mistakes along the way? The point of a budget is to keep you on track day by day as you work to repair your credit. You’ll also be able to easily track your spending habits and progress over time, as well as spotting areas where you could use some improvement. Start a budget and stick to it month after month while you get your credit back on track.

Not Staying On Top of Your Credit Report

Did you know as many as one in five people have a mistake on their credit report? These errors, even when they’re innocent, can do major damage to your good financial name. Check your credit report and FICO score with the major credit bureaus every couple months looking for inaccuracies and tracking improvement from month to month.
Carrying Maximum Balances on Your Credit Cards
While you’ve probably heard that having good credit means using your credit, it’s not an excuse to max out your credit cards. Carrying a balance that’s more than 25% of your credit limit weighs negatively on your credit score. Aim to keep balances at 25% or lower on all of your credit cards.

Applying for Too Much Credit

You likely know by now that each time you apply for new credit, it dings your credit score. What’s more, if you open a bunch of new accounts all at once, it might look to the credit bureaus like you’re shopping around for fast cash to cover your bills. Use discretion when applying for new credit cards and opening new accounts, especially if you’re trying to improve your credit score.

Closing Your Old Accounts

Paying off a credit card’s balance feels wonderful, and it can be so tempting to close that account so you’ll never find yourself in the same maxed-out position again! But in fact, closing old accounts is detrimental to your credit score, as the length of your credit history can be a positive factor. Instead of closing the account, simply cut up the plastic credit card that’s associated with it. That way you won’t be tempted to spend, but you’ll still have the good credit to your name.

Co-Signing for Loans

What do you do if your friend or family member needs help getting a loan? You help them out by co-signing, right? Wrong. If you’re in the process of repairing your own credit, there’s almost no worse decision than co-signing on a loan application with someone else. Not only will the account be placed on your credit report, but you will be responsible for the debt if your friend or family member doesn’t pay on time. You’ll be right back where you started from in the credit repair process! There’s nothing wrong with saying no to co-signing on a loan. Oftentimes, money does not mix well with friends and family, especially where credit repair is concerned.

By avoiding these six pitfalls, you’ll be setting yourself up for financial success and a better credit score in a shorter amount of time.