You do your best to keep your credit score as high as possible. Even if you don’t plan on applying for a loan or buying a house anytime soon, it’s easier to do what you can to improve your credit score as you go, rather than scramble to do everything possible to boost your credit when a financial emergency that requires an emergency loan crops up.
To that end, it’s possible you are doing things in your day-to-day life that can actually eat away at your credit score. Take a close look at this list to ensure you aren’t sabotaging yourself.
Failing To Pay Municipal Debts
Of course, if you don’t pay your credit card bill, your creditor would report that to the credit bureaus. But that’s not the only circumstances under which a credit bureau would ding your credit score.
Depending on where you live, if you have unpaid library fines, parking tickets, or city taxes, your credit score could go down as a result.
Rather than view municipal debts as an inconvenience to put on the back burner, do what you can to pay them off as soon as you can. If the amount is too high, reach out to your local government to see if you can sign up for a payment plan.
A Single Late Payment
In your quest to have the highest credit score possible, you make every effort to pay all your credit card payments either on time or early. Life can get complicated, and you may slip up and forget about a payment, going as many as 30 days before paying what’s owed. Just one late payment is enough to negatively impact your credit score.
If you find yourself in this situation, reach out to your creditor to see if your late payment can be overlooked this one time. Depending on your current standing with your credit card issuer, they may not mind wiping away your transgression this one time. Just do everything you can to ensure it doesn’t happen again.
Only Using Cash
It’s perfectly understandable that you only want to use cash or your debit card for day-to-day purchases. After all, the less credit you use, the higher your credit score.
The only problem with this strategy is that it makes your creditors feel unloved. If six months pass without you using your credit card, your creditors could stop reporting to the bureaus. There’s even a chance your credit card account will be closed due to inactivity, which can harm your credit score.
To balance this out, use your credit card to pay for a tank of gas or a meal every other month. Just make sure you pay the balance off in full before the statement shows up in your inbox or the mail. That way, you’re responsibly using your credit card without incurring debt.
Closing Old Credit Card Accounts
Think twice before closing your older credit card accounts. The age of your credit accounts plays a huge part in your overall credit score. By closing your oldest accounts, you’re shortening your credit history and negatively impacting your credit score.
When you pay a balance off, keep the account open. What if you feel you have too many credit card accounts? It’s best to close the newest accounts rather than the oldest. And be sure you do not close more than one account at a time; wait a couple of months between closings.
Failing To Pay All Your Bills on Time
Yes, even bills besides your credit card bill impact your credit score. Failing to pay your phone, utility, or rent payment can also chip away at the integrity of your credit score. Do what you need to do to best ensure you never pay a late bill. Besides supporting your credit score, making payments on time means you don’t have to incur bothersome late fees.
Shifting Balances to a Single Credit Card
Rather than have several different balances spread out over several different credit cards, all of which have different interest rates, it makes sense to shift everything onto a single card with a low interest rate, right? In actuality, this move could chew into the limit of the single credit card you decide to use.
Your total credit utilization rate plays a big part in your overall score; the higher the rate, the lower your score. If you do decide on a balance shift, watch how much of the total credit you use on the new card.
Agreeing To Act as a Co-Signer
Being a good friend or family member and acting as someone’s co-signer can hurt your credit score. Before signing anything, have a frank and open discussion with your family member or friend about her or his ability to successfully pay off the loan. Not only could you become responsible for the debt if it goes unpaid, but your credit score will also feel the results.
Nearly everything you do with money impacts your credit score. Keep these tips in mind every time you pull out cash, your debit card, or your credit card.