Life can be hard and life can be fast, so it’s easy to make relatively insignificant financial decisions that come back to haunt you.

A well-known example of this is Bristol builder Jamie Pogson, who defaulted on a phone contract when he was young and later found it almost impossible to get a mortgage.

This drove him to launch a parliamentary e-petition asking that people's histories of on-time and regular rental payments were considered by lenders as a matter of law. The petition was then signed by over 140,000 people.

Dog and bone

In our rush to get a shiny new handset, many of us are not aware that when we sign a mobile phone contract, it’s really a credit agreement.

The contract includes the phone, which in effect you pay for 'on credit' over the term of the contract and which is covered by the Consumer Credit Act.

But defaulting on a mobile phone contract is not the only way people damage their credit score. Here are six others:

‘It’s fine, I paid off my payday loan on time’

Lenders look at recent payday loans as evidence of poor money management. And yet millions of people take out these short-term but high interest loans without realising the damage they’re doing to their credit profile. Many people feel they have no choice but to turn to payday lenders, but unless they really are the last resort, it’s best to avoid them.

‘Whoops, I missed a credit card repayment’

There are nearly 60 million credit cards in the UK, but if you run up debt and then forget to make the minimum payment it can be very damaging to your credit score. Lenders assume if you can’t make the minimum payments requested by your credit card supplier, then you must be a high-risk person to lend money to.

‘I’m a bit skint, the loan payment can wait’

Very few people walk away completely from unsecured debt such as a personal loan but many miss a few payments while they sort their finances out. But while there may appear to be no consequences at the time, and the loan is later paid off, the missed payments will be considered later on a by lenders.

‘I like to keep myself under the radar’

One thing lenders view dimly is not being able to tell who you are and where you live when they’re making a credit decision, and one of the key proofs of your address is the Electoral Roll. But some people forget to register, which will make getting credit difficult.

‘I like to have lots of credit cards’

In theory it’s fine to apply for lots of credit cards and loans as long as you pay back any money and your payments are on time. But take out too many loans or credit cards and lenders will start to suspect that your finances are wobbly, even if they are fine.

‘My dad always said don’t get into debt’

Not borrowing money is a good idea in many people’s eyes, but one of the quirks of the credit referencing world is that no record of borrowing can be as bad as defaulting on a payment.

CreditLadder can help you improve your credit score

If you want to improve your credit position by reporting your rent payments, CreditLadder is the only way to improve your credit score and position across all four of the main Credit Reference Agencies in the UK, namely Experian, Equifax, TransUnion and Crediva. Building up a high credit score has a lot of benefits, including helping you access finance at better rates - this can also help save you money.

CreditLadder also runs a free mortgage application service in partnership with Tembo which will tell you how much you could borrow.

Remember the information provided in this article is for information purposes only and should not be considered as advice.