You know that if you don’t pay your car payment or mortgage or credit cards on time your credit score will take a ding and go down. What you might not be aware of are other things that can hurt your score.
It can seem that credit rating agencies go out of their way to hurt your credit score. In fact, some of the things that can cause your score to go down don’t even make sense to a reasonable person, but it is the way of the world.
Here are five things that cause you issues that you wouldn’t think would, but do.
5 Surprising Ways to Hurt Your Credit Score
1.) Not Paying Parking Tickets – Most people at some point in their lives will get a parking ticket, and most people grudgingly pay it by the due date, but what happens if you don’t? More and more cities are turning to collection agencies to collect on those back unpaid parking tickets.
That means if you have an unpaid parking ticket or 10, there is a good chance at some point it or they will be turned over to a collection agency. Once this happens, it will appear as an account in collections. This will seriously damage credit scores.
Even if you are just visiting a city and get a parking ticket, you can end up with this problem, so pay those tickets in a timely manner.
2.) Applying for a new bank or credit union account – If you decide to move your bank account to a credit union or even to another bank, the new institution will do a credit check. This creates a hard inquiry.
One hard credit pull won’t severely damage your credit score, but it might drop it a few points. Also, this hard inquiry can stay on your credit report for two years.
Of course, if you also apply for a new credit card or some type of loan around the same time, these hard inquiries can do real damage.
3.) Renting a car – Most of the time people use a credit card to rent a car, but some people do decide to use a debit card. This is a mistake. If you use a debit card to secure the rental car, the car rental agency will most likely run a credit check on you.
This credit check will be a hard inquiry, and your credit score will go down a few points. As mentioned above, a hard inquiry can stay on your credit report for up to two years, so over time, they can add up.
4.) Not using your credit cards at all – While most people struggle with using their credit cards too much, not using them at all can be an issue as well. It is a great idea to pay off your credit card balance each month, but if you go too long without using the card at all, the credit card company may close the account.
If this happens, your credit score will go down as the amount of credit you have available will decrease and your overall available credit to debt ratio will change for the worse.
5.) Making use of a retail finance plan – You see them all the time. Furniture companies and appliance companies advertise buy it now and pay for it later with no interest. The offer can be too good to resist, but you want to.
The credit reporting agencies consider this type of loan to be a last-resort loan. As such, it will make you appear as if you have a higher credit risk than someone with better credit. This alone can cause your credit score to go down.
Add to it that you now have a new balance due on your credit report that is maxed out. This will hurt your score as well. It is best to avoid these types of offers altogether.
It can be difficult to keep an eye on your credit score with all that goes into determining it, but it’s extremely important to do so. The best rule of thumb is to ask if a hard inquiry will be obtained before making a purchase. That alone can help keep your score as high as possible.
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