by Maurie Backman | April 1, 2020
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Your credit score could take a hit when you least expect it to.
You're probably aware that there are certain behaviors on your part that could cause your credit score to tank. For example, if you're consistently late with your bill payments -- or if you don't pay your bills at all -- your credit will take a major hit, because your payment history is the single most important factor in calculating your credit score.
Another good way to damage your credit is to rack up too much credit card debt at once. Doing so will send your credit utilization ratio (the rate at which you use your available credit) into unfavorable territory.
On the other hand, there are a few unexpected things that could actually impact your credit for the worse. Here are a few surprising ways you might lower your credit score without even realizing it.
Whenever you fail to pay a bill in your name, you risk having that bill sent to a collections agency. And in conjunction with that, a delinquency is likely to show up on your credit report, thereby hurting your score. So while parking tickets won't hurt your driving record by putting points on your license, they can hurt your credit record if you fail to pay them when you're supposed to.
The length of your credit history plays a relatively big part in determining what your score looks like. Having long-term accounts in good standing can help your score stay strong or improve. On the flipside, closing out credit cards you no longer use can have the opposite effect -- it can cause your score to drop. It pays to keep old credit cards that don't charge you an annual fee. If you really don't need them, simply lock the cards in a safe place.
Another thing: Any credit card you have is apt to add to your total credit limit, and that could help from a utilization standpoint. And that's another reason to retain old cards, even if they're not all that valuable to you.
When you sign up for a new cell phone plan, the wireless company will often pull your credit report. They do this to determine your payment plan and whether you need to make a deposit. Any time there’s a hard inquiry on your credit report, it can cause your score to go down. However, the good news is that a single hard inquiry won't hurt your score the way late or delinquent payments will, so don't stress if you need a new phone plan.
The more aware you are of what goes into your credit score, the better positioned you'll be to keep it in decent territory. Having strong credit buys you more financial flexibility, so it's worth making the effort to keep your score in good shape.
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