We're all aware that having a good credit score is an integral part of making some of life's biggest purchases. Without a solid credit score, it will be challenging for you to own a house or buy a car someday.
Two of the major ways to maintain a good credit score is carrying as little debt as you can and paying your bills on time. There are also other factors you may not be aware of that can affect your credit scores.
1. Small unpaid debts
Many people pay for their utility bills, credit cards, and mortgages with undeniable consistency, yet neglect smaller debts. You may feel that these debts are less important or won't be noticed. Some time back, municipalities would report unpaid parking tickets and library fines to credit bureaus, but the practice has long been stopped. However, small debts, no matter how trivial they may seem, like phone payments if unpaid, can weigh down on your credit score.
2. Too many recent credit card applications
It's tempting to apply for new credit cards that often offer attractive bonuses. Retailers may offer in-house discounts while banks may offer airline miles or thousands of points when you apply for their credit cards. As appealing as the offers may seem, too many credit card applications may lower your credit score, especially if it's done in a short period.
3. Shopping for a loan over a long period
To allow for people to shop around and get the best rates available when looking for student loans or home loans, FICO won't penalize you if you have many credit inquiries in a short time. However, this window is open from 14-45 days only. Continuing to shop for the loan over several months will likely hurt your credit score.
4. Business credit cards
Most banks will hold you responsible for any credit on your business credit card if you're the primary cardholder. Late payments and unpaid credits on the cards will be reported to the credit bureaus and will affect your credit score. It's essential to use your business cards as judiciously as your personal cards.
5. Mistakes on your credit reports
Errors or incorrect data on your credit report can hurt your credit score. Spelling mistakes of your name or other people's data with similar names on your credit report can lower your score. In some other cases, clerical errors and typos can adversely affect your financial history information and your credit score. It's important to monitor your credit reports as often as possible.
For most people, even the most financially savvy, credit scores are somewhat a mystery to them. Some don't know what makes up a credit score, how to check them, or how to improve them. To get your credit score reports, go to https://www.goodcredit.com/.
Having a good credit score is important and may give you a lot of open opportunities, but it doesn't make you invincible. There are quite many surprising ways for your good credit score to go down fast.
Comments
Log in or sign up to join the conversation.