The average consumer spends years working on their credit score, building it up to a level that helps them to get better interest rates on everything from mortgages to car loans and more.
Occasionally however, even for the most careful consumers who watch every credit step that they make, a small mistake can wreak havoc on their credit report and credit score. Below are a number of those mistakes to watch out for, so keep reading, take mental notes and, as always, enjoy.
1) Overdue library books, DVDs and so forth. Yes, ladies and gentlemen, we’ve arrived at the day when returning something late to the library can actually affect your credit. Of course you have to really let it go for a long time but, if you do, even an overdue amount of $25 can be forwarded to a collection agency and affect your credit negatively.
2) Paying your apartment rent late. No, you won’t get kicked out your apartment if you make one late payment, or even two or three. On the other hand, it’s very possible that your landlord will report your late payments to the top three credit bureaus, negatively affecting your credit score.
3) Renting a car with a debit card. With some car rental companies a credit screening is required if you rent using a debit card and, you guessed it, this can ding your credit score. If you have the option, reserve a car with a credit card and then pay it when you’re done using your debit card.
4) Not paying parking tickets. The average consumer knows that it’s not a good idea to ignore a traffic citation issued by cop, but what about a parking ticket when the parking meter expires (or something similarly small)? Yeah, that can affect your credit profile too, and not in a good way.
5) Defaulting on your utility or smart phone bill. Utility companies and cell phone service providers don’t mess around when it comes to collecting what you owe them. If you don’t pay fast enough, you can expect to have your account turned over to a collections agency and the resulting report to credit bureaus won’t be pretty.
6) Not paying your unpaid taxes. Messing with Uncle Sam is never a good idea and, if you’ve got a letter demanding payment for your unpaid taxes, not responding to it and working it out is playing with fire.
7) Not paying off your gym membership contract. If you’re like the vast majority of Americans who purchased a gym membership and then, after three or four workouts, stopped going back, your muscles won’t get bigger but your credit score might get smaller if you don’t take care of that bill.
8) Closing old credit card accounts that you don’t use. Most people don’t realize that, even a card they haven’t used in years and that has a zero balance will, if closed, lower their credit score because it will increase their credit utilization ratio. This is especially true for cards that you’ve had for a long time so, unless there’s some urgent need to cut that sucker into pieces, letting it sit in a drawer and using it maybe once or twice a year is a better option.
If you’ve made, or are currently making, any of these mistakes, you already know that they can affect your credit score negatively. If you haven’t, good for you. Now you know what to avoid so that you won’t pay any unnecessary fees and your credit score will stay at a nice, high number.