Your credit score is a harsh representation of your financial responsibility. There are many places that use your credit score as a reference such as potential employers and landlords.
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Having a bad credit score can prevent you from getting a job or renting a home or apartment. Being aware of the items that could damage your credit score can prevent these things from occurring.
Opening department store credit cards
Department store credit cards are sometimes tempting due to the savings offered through their use, but that 10% discount on the items you purchase may not be worth it. These credit lines often have much higher interest rates than the popular cards like Visa or MasterCard.
They also require a hard inquiry to your credit score. Every hard inquiry has a penalty to your credit score, between 5 and 35 points depending on the state of your credit. Suddenly that 10% discount doesn’t seem so attractive.
Closing zero-balance accounts
Having high amounts of credit available on your cards is an indication that you have been responsible in repaying your debt. Why remove that proof by closing those credit lines you’ve fought so hard to pay down?
Paddon & Yorke Inc., a company that provides debt help in Toronto, suggests leaving those lines open to lower your ratio of debt to credit available. It also gives you a longer credit history that contributes to a higher score.
Unpaid parking tickets
Leaving anything unpaid sends your debt to a collections agency. Every time this happens, you lose points on your credit score. This used to only apply to debt incurred through various businesses, but more and more police jurisdictions are using collections agencies to collect payments for unpaid parking tickets.
Pay these as soon as possible to keep your score high.
Using finance plans for big purchases
The most common example of this is found in furniture stores. Many stores offer their own financing plans with very low interest rates and long periods of repayment. However, this negatively affects your credit because it basically acts as a maxed-out credit card. Having this on your credit can be very detrimental to your score. If possible, use existing credit cards with high limits instead.
Keeping your credit score in check can be a challenge, but avoiding these unusual dings to your score can keep those points high. Check your credit score regularly to see the evidence of your financial responsibility in action.
Savannah Coulsen
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