You Might Be Hurting Your Credit Score And Not Even Know It
You may have been embarrassed for getting a low grade on a test when you were a child. Today, having a "low grade" on your credit score has much more serious repercussions, though. Not only will a low score hinder you from acquiring loans and mortgages, it can also financially set you back months, or even years.
Here are 10 ways you might be hurting your credit score. Avoid them at all costs.
SEE ALSO: Top 6 Credit Score Myths
1. Making Late Payments
Though most creditors allow a 30-day grace period for payments, a delinquency could cause a 100 point drop or more.
2. Not Paying Down Balances
The closer your credit balances creep toward the limit, the lower your credit score. Maintain a credit balance no higher than 35 percent
of your credit line.
3. Closing Accounts
Closing credit accounts can hurt you because the credit score formula takes the age of your accounts into consideration
. Eliminating a card can reduce the average age of your credit accounts and thereby lower your score.
4. Maxing Out Cards
When you max out a card, or go over the limit, your credit utilization is 100 percent
, which means that you used up all of your available credit. A low utilization percentage equals a higher credit score.
5. Not Paying Fines and Fees
Trying to forget about those parking tickets? Library late fees and unpaid parking tickets will come back to haunt you
if the offending organization decides to send your account to collections.
6. Asking For Your Credit Report/Score Excessively
Avoid opening several credit accounts or loans within a short period of time. With 10 percent of your scores calculation on the line, more than one credit inquiry within a specified time period can send your score plummeting
7. Declaring Bankruptcy
Once filed, bankruptcies will continue to affect a score until they are removed
. Chapter 11 and 7 bankruptcies last up to 10 years. Chapter 13 bankruptcies are typically removed in seven years or less.
8. Having A Foreclosure
Foreclosures will prevent you from acquiring a mortgage
. Though they remain on your credit report for seven years, you may see an improvement in as little as two years, as long as your other accounts are in good standing.
SEE ALSO: The Foreclosure Timeline
9. Missing Utility Bills
Though most utility companies permit grace periods, theyll send your account to collections if you dont pay. Avoid a delinquent account
by setting up a payment plan. Sometimes, even a small payment is enough to keep your credit score from taking a hit.
10. Getting No Limit Cards
Cards with unlimited credit may sound good at first, but they may hurt your credit score.
If the creditors dont report a limit, your credit utilization will appear higher than it is.
Your credit score defines your financial future. Keep it high, and it will always reward you with low interest rates, preferred offers, and the ability to acquire a mortgage easily.