Your credit score is a significant figure determined by how you pay specific expenses, such as credit cards and loans. However, certain financial transactions you conduct on a daily basis have impact on your credit score, whether good or poor. Here are ten things that can jeopardize your credit score.
Your credit score may suffer if you make even one payment more than 30 days late, even if you have the finest credit card for good credit. Credit card providers are likely to tell credit-reporting agencies about your delay at this time, which can lower your credit score.
Late payments on credit cards aren't the only thing that might harm your credit. Late utility, rent, phone, or loan payments can all have a negative impact.
Every time you seek credit, a hard credit inquiry is made on your account, whether it's for a mortgage or a retail credit card. Even if you are not accepted, every hard inquiry has an impact on your credit score.
Keep your credit card even if you've paid it off. Canceling a credit card might negatively impact your credit score in two ways: It lowers your overall credit limit, potentially increasing your credit use ratio. It also has the potential to shorten the length of your credit history.
Although carrying only one card is handy, consolidating your debts on a single card may not be advantageous to your credit. Having a single large amount that approaches your credit limit raises your credit usage, which lowers your credit score.
When you use your strong credit to co-sign a loan for a family member or friend with bad credit, you accept responsibility for their debt. You'll have to pay if they can't, or your good credit will face the penalties.
Your credit score isn't only based on your credit card usage. It's beneficial to have a combination of credit kinds — revolving and installment — on your credit report.
It might harm your good credit if your balances are creeping up toward your credit limit. Maintain a credit utilization ratio of no more than 30% of your available credit — the lower, the better.
Unemployment claims will jeopardize your good credit is a myth; not being able to pay your obligations is what will ruin your credit. Before you miss a payment, talk to your creditors to see if there are any ways to mitigate the impact on your accounts.
Understanding what factors go into your credit score and how different activities effect it can help you plan your financial strategy and be more strategic with your money.
Assistant Manager, Real EstateTreadstone Associates