3 Ways You're Hurting Your Credit Score Without Realizing It

These moves might seem harmless, but they could actually be quite damaging.

Building good credit takes time, and the higher your score, the easier it’ll be for you to borrow money affordably as the need arises. Now you’re probably aware that certain habits will cause your credit score to shrink. For example, if you’re frequently late paying your bills, or you don’t pay them at all, it’ll drive your score down (not to mention put you at risk of being sued by your various creditors). But here are a few less obvious actions that could result in a serious decline in your credit score. 

1. Running up too high a credit card tab

You might assume that carrying a giant credit card balance is no big deal as long as you make your monthly payments on schedule. But actually, too high a credit card balance can hurt your score in a very big way. 

Of the various factors that go into calculating your credit score, credit utilization carries a lot of weight. Utilization speaks to the extent to which you’re using your available credit, and you never want that number to exceed 30%. This means that if your credit limit is $5,000, you shouldn’t have a balance that exceeds the $1,500 mark. Therefore, while you might think it’s okay to run up a giant credit card balance, doing so won’t just cost you money in interest; it could also cost you in the form of credit damage. 

2. Closing credit cards you don't use

If you’ve been carrying around a credit card you don’t use, you might assume that closing that account is the smart thing to do. After all, not having that card active means you won’t have to worry about someone stealing it. But actually, closing an unused credit card can hurt you in a couple of ways. First, if it’s an account you’ve had for a long time, closing it out could impact your length of credit history, which is another factor in determining your score.

Closing an unused credit card can also impact your credit utilization. If the card in question comes with a high credit limit and you get rid of it, you’ll have less available credit to work with, which means a lower balance will send you into unfavorable territory on the utilization front. Therefore, think twice before closing a credit card you don’t use, especially if the card in question doesn’t charge an annual fee. 

3. Applying for too many credit cards at once

Whenever you apply for a new credit card or loan, the lender in question is apt to check your credit record to determine if you're a responsible enough borrower. When that happens, it's called a hard inquiry on your credit record, and too many hard inquiries could drag down your credit score. 

Keep in mind that not every hard inquiry will cause immediate damage. But to be on the safe side, you're better off not applying for or opening too many new credit accounts within the same few weeks, or even months. 

The last thing you want to do is wreck your credit score accidentally and struggle to borrow money the next time you need to. The aforementioned moves may not seem too detrimental, but you’re best off avoiding them if your goal is to keep your credit score intact.