Be Aware: These 8 Things Can Hurt Your Credit Score

You’re probably aware of the main things that can effectively decrease your credit score: carrying high credit balances, not making your payments on time, declaring bankruptcy, having delinquent accounts sent to collections. However, other scenarios and actions can quickly drop your score as well.


Paying attention to these things that will hurt your credit score can help you avoid unwanted credit score drops.

1. Closing a Credit Account

If you have an unused or paid off credit card account, do not make the mistake of closing it. When you do this, it will reduce the amount of credit you show available to you and potentially increase your debt to income ration. This mistake can be costly to your credit score, unfortunately.

2. Taking Out a New Line of Credit for a Large Purchase

When you choose to finance something, such as furniture, this can hurt your credit score. Loans of this nature are often viewed as high risk by credit agencies, and the loan will show as maxed out on your credit report since it was taken to finance a particular buy. Unfortunately, this credit move can cause some long-term issues, even if the loan is paid on time.

3. Unpaid Child Support

Not making your child support payments can potentially send what you owe to collections or cause a lien to be placed against you. Both scenarios can lower your credit rating significantly.

4. Unused Credit Cards

Paying off your credit cards is a great thing; however, they will still need to be regularly utilized. Otherwise, the creditor may close your accounts, which can lower your score by reducing the amount of credit available to you. If you have credit accounts with a zero balance, try utilizing them at least once a month for a smaller purchase and immediately paying off the purchase, so you don’t carry a balance on the card.

5. Shopping for Loans

When you are considering financing a large purchase, such as a home or car, it’s smart to do some comparison shopping to make sure you are getting the best rates and the best offer available to you. However, when you shop for a loan, each creditor will do a hard pull on your credit. Try to limit how many companies run your credit during your search and the time frame in which you are conducting your search. If you spread your search out over a long period of time, each hard credit pull can substantially ding your credit.

6. Debt Consolidation

While debt consolidation can work for some and assist in paying off your bills quicker and at lower amounts and rates, it can hurt your credit score. The reason for this is that the accounts you are seeking to consolidate will be placed together on one loan, which will show as maxed out, and the other credit accounts may be closed. This option could make it so you show no lines of credit available to you.

7. Being Affected by Someone Else’s Bad Credit Utilization

Being added as an authorized user to a friend or family member’s credit account can help increase your score positively if handled correctly and payments are made on time by the account holder. However, if the account holder is carrying high balances on their account, not making payments on time, or allowing their accounts to become delinquent, this will also negatively mark your credit report and drop your score.

8. Having too Many Credit Cards

While having a good amount of unused credit spread out amongst a few different credit accounts can be a good thing, having too many credit cards can have the opposite effect. The reason for this is that with the opening of each new credit card, your average age of credit will decrease, which will lower your overall credit score.

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