A good Credit Score goes a long way and one should never do anything to hurt it. But there are many things which affect your credit score and sometimes we might not even be aware of them. Half knowledge about what affects your credit score could really hurt your score and leave you with a bad report.
So here are a few things which are hurting your credit score which you never knew about:
1. Avoiding paying your fines and dues
If you thought that not paying your library fine or rent on time won’t affect your Credit Score, think again! If you are one of those who ignores the parking tickets and library fines and thinks that it can’t potentially harm you, well you are in for a nasty surprise. CreditRepairXP (which recently acquired VeTransfer.org) is a big advocate of this issue and has mentioned that almost all of its users make this major mistake.
These small dues can really hurt your credit score if the company decides to use a collection agency to resolve all these accounts by you. Regret it already? The worst part is that these collections stay on your credit report for at least 7 years!!!
That is the worst thing and will definitely hit your credit score badly. So make sure you clear up all your small or big dues on time.
2. Not using your Credit Card
Yes, credit cards can be a pain with their huge interest rates and payment policies. But they can help you with your credit score if used wisely.
I know you would probably think that if I am not using my credit card, my credit score would be high right? Well, sorry to disappoint you but it could actually be counter-effective for your credit score.
When you don’t use your credit card anymore, creditors don’t have any history and after some time due to a lack of use, your credit account might also get closed.
This could be really bad for you when you are applying for credits and there is no history to back you up.
3. High Credit Card utilization
Everything is bad in too much quantity, even using your credit card. While not using your credit card can hurt your chance of getting a loan greatly, having a credit card with too much utilization could also lead to the same result.
Make sure you always keep your credit card usage to just 30% and don’t exceed that limit. The lesser the utilization is, the higher your credit score will be.
4. Paying high amounts with your Debit card
You must have thought that when you already have money in your account, why not use the debit card directly? Why even bring the credit card into use? I can tell you why using your Debit Card for huge payments could be a big mistake.
Imagine you are renting a car for a few days and decide to use your debit card instead of your credit card, the renting agency will get your credit report and make sneaky inquiries with your credit agencies.
This could really hurt your credit score because multiply inquires in a fixed period of time tend to lower your credit score and this data remains on your report for 2 years. So next time you plan to make a huge deposit, use cash or a credit card.
5. Applying for too many credits
Don’t apply for too many loans at once or in a short interval of time. This tends to lower your credit score because when you apply for a loan, the agencies pull out your report and make multiple inquiries about you.
Thankfully, if the loan you are applying for is a car loan or a mortgage loan, then the credit agencies consider this as a single inquiry and keep your credit score safe. But other than that, you need to be extra careful while applying for loans and credits.