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9 Unexpected Things That Can Hurt Your Credit

November 26, 2018

Most individuals are aware that certain behavior can ding their score. For example, not paying bills on time, or defaulting on debt altogether, may seriously harm your credit. Having said that, there are a few other things that may seem harmless, but can nevertheless have a detrimental impact on your score. To protect yourself from unknowingly damaging your credit, commit the following list to memory, and avoid these actions at all cost.

  1. If you are in possession of any overdue library books, beware! While libraries don’t directly report to credit bureaus, they may enlist the services of debt collectors to recover fines, who in turn can cause black marks on your credit profile. Similarly, unpaid medical bills and outstanding parking tickets can be sent to collection agencies as well.
  2. You may feel that requesting a limit increase on your credit card is harmless – after all, you’re not really opening any new accounts. However, this action may result in a hard inquiry; that is, your issuer can pull your credit report to determine whether it is worth raising your limit or not. This may cause you to lose a few points from your score.
  3. If you close a credit card, especially one that has a balance, your credit utilization, which is the proportion of total available credit used by you, can shoot up. Moreover, the average age of your accounts may drop as well, which can result in a negative impact on your credit.
  4. Many people try to rent a car without a credit card. This not only requires extra documentation but may also prompt the company to run a check against your credit, which can also affect your score.
  5. Applying for a new cell phone contract may harm your credit, as the service provider may pull your credit report before approving your application.
  6. It is tempting to transfer all your balances to a single card because then you only have to manage a single credit instrument. However, doing so can bring your balance dangerously close to your credit limit, and any credit utilization ratio above 30% can seriously damage your score.
  7. If you co-sign a loan for a family member or friend with less than perfect credit, your score can take a hit. Not only will your credit be impacted by the hard inquiry, but the resulting loan balance or credit card may raise your credit utilization ratio and lower the average age of your accounts. Finally, if the account has past-due payments, it will cause further damage to your score.
  8. Some individuals feel that they can protect their credit score by not owning credit cards at all. This too is a misconception. For a good credit score, it is important to have credit diversity, that is, a mix of revolving and installment loans.
  9. Each of the three credit bureaus, Experian, TransUnion, and Equifax, are obligated to provide you with a free credit report once a year. Hence, using annualcreditreport.com, you can access your report for free once every four months. Use this opportunity to scour your report for any errors that may be damaging your credit score. Ignoring your report on a regular basis can also be detrimental to your score.  

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Ari Page Ari Page is the CEO of Fund&Grow. He resides in Spring Hill, Florida with his wife and two children.

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