Countless articles regarding credit inform consumers about the big events that can have a negative impact on their credit score. But, many consumers fail to realize all the little transactions or little known transactions that may have a fairly significant and harmful influence on their credit score.
We all now the importance of good credit and a good credit score in our society with its wide ranging impact from credit and borrowing to employment to insurance and housing and more. Most consumers are also well aware that the higher their credit score the better. And most consumers are aware or becoming more aware of the basics for keeping their credit score high. What some consumers fail to realize is all the lesser know actions that can really harm a credit score.
The basics on credit and credit score management are covered within this site as well as other sources on credit management. These are the key elements that to avoid in order to maintain a high credit score. They are the actions that can have a clear detrimental affect on your credit report and credit score. The obvious actions include late payments on credit accounts that are in a credit report such as credit card, car loans and mortgages, carrying too much credit card debt and more.
But there a lot of consumers and lending professional who do not know all of the not so obvious factors that can harm a credit score. This list reviews the so not so obvious actions to avoid as well as some actions that involve common sense but, where some consumers are not aware at just how damaging their action really is.
#1. Having credit accounts with balances near their maximum amount available. The percentage of available credit used is a key factor in determining a credit score and having a credit account, even if it is a balance transfer on a credit card to consolidate debt, at or near its total available credit limit will eat up all of the available credit and will lower a credit score.
#2. Short lengths of time between new credit accounts or having multiple credit accounts opened in a short period of time. Even consumers with good credit who open multiple accounts will find their credit score may drop due to opening new accounts in a short period of time.
#3. Having late payments accounts turn into collection accounts that in turn become accounts listed in the public records section of your credit report. Public records like judgements, liens and bankruptcies can have a big, negative impact on a credit score. These types of accounts can have a big impact even when the dollar amount is relatively small.
#4. Having too many store credit cards and too few bank credit card accounts. These accounts have a lower value as they are evaluated by credit scoring models and therefore having more of these accounts and fewer heavier weighted credit accounts can bring a credit score down.
#5. Having no recent credit activity or no recent revolving account activity such as credit card balances and monthly payments. It can actually hurt your score if you pay off your balance in full each month or simply don’t make transactions with credit. Without a monthly payment history, the credit score models have very little data to work with.
#6. Collection accounts and more collection accounts. Collections accounts may rank as one of the more obvious credit score killers, and there are now more types of accounts that are being sent to collection companies that report to credit reporting agencies which will shift a credit score lower. More and more local governments are reporting unpaid parking tickets, library fines and other delinquent fees to collections agencies which may get reported to the credit bureaus and impair a credit score.
#7. Creditors showing delinquent credit records that normally don’t report to credit reporting companies are now reporting in greater numbers. This can be especially true on those customers with a sketchy payment history. The biggest example of this change is the utility companies such as the electric company, gas company, phone company, etc… More utility companies are reporting seriously delinquent accounts as well as customers that are simply 30 days late to the credit reporting agencies which is definitely going to hurt an individuals credit score.
#8. Excessive inquiries. Every time someone looks at an individuals credit report, it is considered as an inquiry and stays with the credit history. Too many inquiries can lower a credit score since it is indication of someone opening more credit and incurring more debt.
And don’t forget more of the basics that will damage a credit score such as having high credit card balances, high balances relative to available credit and late payments.