5 Easiest Ways To Ruin Your Credit Score

By Christine Layton / February 22, 2017
credit card billing cycle explained

Achieving and then maintaining a good credit score can be tough. Unfortunately, it’s easy to make small mistakes that are easy to overlook — until they hurt your credit score. A few mistakes and it won’t be long before your credit score starts to plummet, making it difficult to get a car loan, a mortgage or a even a new job.

Whether you’re trying to maintain your good credit standing or you’re just starting to build your credit history, make sure you avoid these 5 easy mistakes that can end up costing you.

Five Easiest Ways To Ruin Your Credit Score

Whether you’re trying to maintain your good credit standing or you’re just starting to build your credit history, make sure you avoid these 5 easy mistakes that can end up costing you.

1. Failing to Pay Utility Bills, Library Fees and Parking Tickets

Most people are very consistent with their mortgage and credit card payments, although small debts can easily be overlooked because they just don’t seem as important. Some even feel unpaid parking tickets will simply go away eventually if they’re ignored. Did you know these small fees can actually be reported to your credit report if they go unpaid for too long?

Many municipalities and libraries report unpaid fees to all major credit bureaus and even a $100 fee can seriously impact your credit score. The same goes for utility bills. While your electric company probably doesn’t report your payment history to credit bureaus to help your credit, they will quickly report a delinquent account.

We see members post about this happening time and time again on the forums. Don’t neglect any debts, no matter how insignificant they seem. Remember: nearly anything can be reported to your credit history if you fail to pay it on time.

2. Watch Those Old Student Loans

Did you know the outstanding student loan debt in the United States exceeds that of credit card debt and auto loan debt? Did you know that more than one-third of student loan borrowers are also delinquent on their debt?

Student loans can dramatically impact your credit score if you fall behind and miss a payment, even on a loan from many years ago. A missed payment will affect your percentage of on-time payments on your credit history and may lead to wage garnishment if it goes too long. Student loans are also very difficult to get discharged in bankruptcy, if it ever comes to that.

While student loans are a great way to diversify your credit and improve your score, they can come back to bite you if you forget about them after you get out of college. Keep paying on student loans and don’t let them fall behind!

3. Be Careful with Store Credit Cards

Have you ever applied for a store credit card in-store while making a relatively small purchase? Many consumers sign up for a store card with a low balance and then forget about it completely. Meanwhile, that $100 trip to the store turns into hundreds with interest and penalties and your credit score suffers.

Important: Never sign up for a store credit card on impulse and keep track of all of your credit cards to make sure they’re paid on time, no matter how small the balance.

4. Don’t Abandon Your Credit Cards!

If you don’t find yourself using credit very often, it’s easy to forget about your credit card accounts and leave them to go stale.

When your credit cards become stale, the company will probably stop reporting to the credit bureaus or close your account due to inactivity. Think this isn’t a big deal? Actually, these closed and inactive accounts can hurt your credit score by impacting your debt-to-credit ratio. The account will also be marked as closed by creditor rather than consumer, which will remain visible to potential creditors in the future.

To keep your credit card accounts from going stale, set up a small monthly payment to make sure your account stays active and then set up automatic payments from your checking account. This way, you’ll have one less thing to worry about in terms of your credit score.

5. Failing to Check Your Credit Report

Finally, remember that not checking your credit report can end up hurting you. It’s actually very common to find negative — and incorrect! — information on your credit history that’s bringing down your score, such as an outstanding loan that isn’t yours or a court fee that doesn’t belong to you. This is particularly important if you have a common name, as you may have someone else’s information on your file.

Take the time to request a free annual credit report from www.AnnualCreditReport.com to check for errors and look for any areas where your credit history could use some improvement.

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