There are things everyone knows hurts their credit score such as bankruptcies, not paying past-due bills and going into collects. However, the massive amount of data collection occurring in modern society and detailed risk analysis means that many little decisions can hurt your credit. And this can be true even if it is not a purely financial decision. Here are 9 things you didn’t know could hurt your credit score.
Overdue Library Books
Being a week late on that stack of toddler books isn’t going to hurt your digital reputation score unless you live under China’s Sesame Credit system. However, the unpaid library fine could eventually hurt your credit score. Libraries don’t report fines to credit bureaus. Yet it will show up on your credit report once it gets to a debt collector. The solution to this is to pay any past due fines as soon as you know they exist and avoid turning anything in late or in bad shape. If you don’t have the money, research amnesty days where your fine could be forgiven if you donate canned food instead.
Asking for a Credit Limit Increase
Asking for an increase in your credit limit could cause a credit inquiry. This could cause your credit score to drop a few points. Do this for several accounts, and it will look suspicious to creditors. However, the creditors choosing to raise your credit limit on their own will not hurt your credit score.
Forgetting about Those Store Credit Cards
You signed up for that store card to get the discount on your purchase. You paid off the purchase and forgot about it. The problem looming on the horizon are the terms and conditions tied to many such cards. Don’t buy from them every so often, and they may hit you with an annual fee. And store card bills are often tossed as just more marketing material, because you weren’t expecting a bill from them. This is why it is quite common for your credit score to come down because you didn’t pay the annual fee on a store credit card you last used two years ago.
Note that cutting the credit cards up doesn’t count as closing the account. You have to call them and explicitly cancel the card. And that can only be done after you’re current on the account.
Failing to Pay Medical Bills
Medical bills are one of the most frustrating areas for consumers. Because of medical insurance and government programs getting in the middle of the billing process, you may not realize there is a balance to pay until you’re sent the bill six months later. In other cases, you could be hit with medical bills for service providers like anesthesiologists and labs you didn’t realize you’d owe. Add their bill to the stack of hospital bills, and it is easy to end up failing to pay the bill on time. Nor are these individual bills paid if the hospital forgives your primary debt.
This is why unpaid medical bills are a common cause of drops in your credit score, even if you weren’t out of work and were able to arrange a payment plan.
Applying for Too Many Lines of Credit
Applying for several credit cards in one weekend can hurt your credit score, whether you’re celebrating being old enough to do so or are trying to take advantage of every store card discount while on a shopping spree. In a worst case scenario, your applications are denied because it looks like someone is attempting to commit identity theft. Avoid opening new accounts to roll over the old debt, because this churn hurts your credit, too. In the meantime, click here to learn more on installment loans for bad credit loans so that you don’t have to pay more than is necessary.
Cutting Up All the Credit Cards
Closing your credit cards as you pay off the debt can help your credit. And it may check your overspending. However, it may hurt your credit, too. Closing cards without terminating all of the automatic bills tied to them could cause you to have past-due bills by the time you get the notice. This may be due to subscription services tied to the credit card or irregular bills like transit passes and toll tags that only hit the card when you use up the existing balance.
The solution is to pay down your balance and slowly get control of your automatic debits, moving them to a main debit or credit account. Paying off the debts always improves your credit score. Close the accounts you rarely use. Leave at least one older credit line open to maintain your credit history.
The Horrors of the Company Credit Card
Company credit cards often end up hurting the employee. If the credit card is in your name, the company is supposed to pay it off, but you’re left holding the bag if they’re slow to pay or never pay. If the company goes out of business, you’re probably liable for those company meals and gas tank fill-ups. This is why honorable companies don’t make you get a credit card but instead pay for things out of the travel office. And that is only offset by the occasional reimbursement the employee pays for out of pocket however they want, including cash. Note that if you have a business credit card and are listed as the primary account holder, failure to pay the payments on time because you are waiting for reimbursement will hurt your personal credit score. That’s true even if you’re the business owner.
Parking Tickets
Parking tickets are frustrating for drivers. Failing to pay them will hurt you in a variety of ways. They’re regularly sent to collection agencies, and they always put this on your credit report. Repeatedly failing to pay tickets can lead to criminal charges. Bench warrants for failing to pay your parking tickets have no statute of limitations, and that will hurt your employment background check.
Unpaid Utility Bills
Utility companies may not be allowed to turn off your service because of an emergency or health problem, but they can report delinquent accounts to creditors. In fact, they do so more quickly than other creditors because they deal with so many slow payers. If you’re financially stressed, talk to them immediately about payment plans or discounts for those on government benefits before you’re late paying the bills.
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