If you’ve been reading our blogs, then you probably have the goal of improving your credit in mind. Raising your credit score by dozens or even hundreds of points is important, but it’s also important to make sure to protect your credit score by avoiding actions that could negatively impact it. Most people don’t always know what does and doesn’t make a credit score decrease. If you’ve done these five things, or plan to do them in the near future, you might want to think twice. The following seven actions can seriously hurt your credit score.
- Applying for a loan or an apartment. Most apartment landlords and professional lenders will require you to have a credit check. Though it may seem pretty harmless, credit checks will lower your credit score, especially if the span of time that you’re getting multiple credit checks lasts longer than 2 weeks. If you’re looking to borrow, do yourself a favor and wait until your credit score is high enough to ensure approval. Otherwise, you may end up hurting yourself more than you expected to.
- Renting a car with your debit card. This one may shock you, simply because it’s hard to see the connection between your credit score and car rentals. Most car rental groups will insist on using a credit card, but those that allow you to rent with a debit card may actually pull up your credit score before they allow you to sign on the dotted line. This will make your credit score dip more than it would if you just allowed them to charge a credit card. Go figure!
- Halting all use of credit cards. Believe it or not, credit cards actually want to see you use their wares. The truth is that not using your credit card but keeping it in good standing will actually lower your score because it doesn’t actually show you as a person who can manage finances responsibly. Among lenders, it also may signal that you aren’t good at handling debt. So, even if it’s just once every four months or so, use your credit card to enjoy a nice dinner.
- Making a major purchase using finance plans or layaway services. This is actually considered to be a loan by most credit bureaus, especially if it is a purchase that is larger than $1000. The bigger issue with store financing isn’t that it’s viewed as a line of credit, but that it’s viewed as a maxed out line of credit. That actually makes any store financing a major problem on your credit report.
- Not paying off your parking tickets. Usually, when you don’t pay your parking tickets, you only will have to risk the possibility of a bench warrant and arrest. Times are changing, though, and many major metropolitan areas are now sending unpaid tickets to collections agencies. If you end up with an unpaid ticket getting sent to collections, then you’re going to be in trouble. That collections mark will show up on your credit report!
- Requesting an increase on your credit limit on a regular basis. This is actually one of the most shocking truths for many people, since those who want to boost their credit will try to do so by increasing their credit limits. Though the increase may boost your credit score in the long run, regular demands for a limit increase can potentially harm your score. The reason is that credit card companies will need to check your FICO score before they give you the increase, and you guessed it, you can be denied based on a low score. It’s best to avoid asking for increases more than once a year.
- Closing a pesky credit card. Some credit cards are just plain awful to have, and will seemingly be a perpetual thorn in your side. While it may make sense in the long run to close a credit card that has a lot of trouble attached to it, you should brace yourself because it will have a negative impact on your credit report. If it’s at all doable, make a point to brace yourself for the credit score hit, or avoid closing the credit card at all.
Getting a good credit score is possible, but to make it happen fast, learning what not to do is just as important as learning what you should do. After all, you can’t avoid mistakes unless you know what the mistakes are.