10 Surprising Ways You Could be Destroying Your Credit

Most of us don’t sit around thinking about our credit worthiness a whole lot. Generally, if you’re paying your bills mostly on time and no one’s chasing you down for money, you probably think your credit’s fine.  Surprisingly though, there are a whole host of seemingly innocuous ways that you could be screwing up your credit without even realizing it.

  1. Consolidating your debt – Taking advantage of lower interest rates is a sound financial decision because you ultimately end up with a lower monthly payment. However, transferring all of your debt onto one credit card means that you are going to be closer to the credit limit, which looks to lenders like you have no self control. Instead, try to keep several credit cards open with a balance of no more than 35% of the credit line on each.
  2. Closing out accounts – Instead of closing out credit accounts when you pay them off, keep the line of credit open so that lenders can see that in your credit history. Generally, lenders like to see three solid lines of credit for borrowers, so if you close out all of your accounts, lenders have no way of knowing your payment history.
  3. Opening a bunch of store cards – Saving 10 or 20% on your in-store purchase by applying for a store card can be tempting, but try not to go overboard. Too many store cards in a short period of time tells lenders that you might suddenly go on a spending spree. It makes you look riskier to them.
  4. Taking cash advances from your credit card – This can be a risky thing to do because it can seem like “free money” and you may be tempted not to pay it all off right away, only adding to your credit card balance.
  5. Perpetually returning library books late – Believe it or not, delinquent library fines can have a negative effect on your credit number, so always return your books on time!
  6. Forgetting to pay your parking tickets – Although it may seem like something small, even an unpaid parking ticket can be sent to collection agencies, who have the ability to trash your credit by 100 points or more. Yes, just for an unpaid parking ticket.
  7. Co-mingling your credit when you co-habitate – It feels good to share finances when you move in with a significant other, but it’s much smarter to keep your accounts separate. If one of you loses your job or cannot pay for another reason, only one person’s credit will be ruined – instead of both.
  8. Getting divorced – When you get married, you never think of the minute possibility of ruining your spouse’s credit somewhere in the distant future. However, if you end up divorced, your ex-spouse may not be paying his or her share of debts that are also in your name, dragging your credit into the ground.
  9. Checking your credit score too much – Every time you want to borrow money from someone, they are going to want to run a credit check on you. After a lot of credit checks in a short period of time, lenders are going to think you are scrambling to create a credit history. Instead, request one copy of your own credit report, and share it with multiple lenders before making a decision about who you borrow from.
  10. Being a nomad – Lenders look for stability in borrowers. Changing jobs frequently and moving around a lot suggests that you live a high risk lifestyle and can also result in unforwarded bills that go unpaid.

Of course, don’t do the obvious things either, like maxing out all of your credit cards or never paying your bills on time (even one late payment can drop your score!), and be sure to check your credit report at least once a year to check for any little surprises that you didn’t know about.  Be in the know now, so that when you need to look good to lenders, you’ll have nothing to worry about.

*Photo provided by The Digitel

8 Responses to 10 Surprising Ways You Could be Destroying Your Credit

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