Things That Affect Your Credit

It is not strange to hear of people who have spent a considerable amount of time, often years, trying to improve their credit score only to realize that their FICO score has been severely bad almost overnight by some mistake they did ages ago.

All too often, there are those small things that you do that leave you exposed to this problem. The sad thing is that you always end up realizing the problem after the damage has already been done to your credit score. Thus, by avoiding the things below, you can ensure that your credit score remains intact and continues to improve.

Unpaid traffic offences

Have you recently misplaced your traffic ticket and consequently forgotten to pay it? If you think you have escaped it, think again. Failure to pay this citation often exposes you to late penalty fees and at times interest charges which can accrue to large amounts. Additionally, if it remains unpaid for a substantial amount of time, the authorities can decide to report the matter to the credit bureau for the necessary action to be taken. This will thus hurt your credit score while at the same time leave you with added costs that you thought did not exist.

Library fines

Whenever you check out a book, DVD or other material from the library, you will usually receive an email indicating what you have taken out and another telling you when you should return the material to the library. If you have seen the due date being written in bold, then you should not think that it is a miss-type. Usually, immediately you default returning, late return fees begin being charged to your account.

Since these amounts usually tend to be minimal, the interest charged tends to accumulate due to neglect and once the matter is reported to the credit bureau, you are often left wondering what happened yet you were informed well in advance by the email.

Credit card applications

If you have just immersed yourself into the credit world, then you know how appealing the lure of “free funds” can be. Since credit accounts for 10% of your FICO score, you should ensure that you do your research well on which account you want to open. Opening too many accounts will leave you vulnerable and having high interest costs especially if you use more than 25% of the credit card funds available to you.

In-house financing

If you have approached lenders who offer risky loans to those with bad credit scores, you should be aware that they normally do not report your history to the credit bureaus. This means that even if you have been taking out their loans, your prompt payments will not reflect with the credit bureau. Thus, you should discuss with these buy-here-pay-here lenders if it is possible for them to forward the same to the lenders or you will have to make the concerted effort yourself so that you can improve on your credit score.

Closing idle accounts

If you have been tempted to close your idle credit accounts, you should not do it especially if you have a balance present. This is because it will continue to increase your utilization ratio even though the balance might still remain the same. The result will be that it will negatively impact your credit score. So before you go ahead to close those accounts, you should ensure that you have completely cleared your balance.

Service connections

Whenever you are taking out a utility service, the providers will make a hard inquiry about your credit history prior to giving you their services. This means that if your credit score is bad, this type of inquiry could further negatively impact your credit score since your application to receive services such as internet and cable will be rejected.

New bank account

Since opening a new bank out involves making a hard inquiry, you should first discuss the same with the financial institution so that they can properly explain to you how the application process works and whether it will negatively impact your score.

Rental car reservations

Whenever you are renting out a vehicle, the car dealer will usually request you to provide your credit card to process the transaction. While this is perfectly okay, it usually means that they make a hard inquiry if you only have a debit card on you. This will mean you will have to contend with lots of paperwork in addition to the high security deposit that will be leveled on your debit card.

Medical bills

Hospital bills tend to be outrageous at times. Even the simplest check-up can leave you with an enormous bill to pay especially if you do not have insurance to cover the cost. Thus, you can discuss with hospital management on a payment plan that is suitable to both of you. Failure to do this can make the hospital management report you to the credit bureau. In addition, the hospital can level interest charges or penalties for late payment or default which if you fail to pay can further reduce the number of points in your credit score.

Skipped payment

Even if you are going through hard times, you should try your best to make payments on your credit card or other payments as when they fall due. If you are not able to, you should contact the service provider or creditor to explain your financial position. You will find that they are very understanding and can explain to you which options are available at your disposal to ensure that your score is not affected.

Unpaid tax liabilities

Usually, the governing agency will let them earn interest and accrue interest.

Then, when they deem them as collectible, they will report the matter to the credit bureau. Thus, these tax liabilities should be paid as and when they fall due since these institutions do not really bother following up with you to make sure that you have made payment.

Neglected gym membership

Going to the gym can be a tasking exercise. If you are planning on stopping, you should ensure that you terminate the contract properly lest you have your details forwarded to the collections as a defaulter.

Thus, by avoiding these things, you can ensure that you do not sabotage your credit score in the future since it is quite easy to forget some of them.

badcreditlifelineThings That Affect Your Credit