5 Things That Could Hurt Your Credit Score

It is a common sense that acting in a financially responsible way, you will be able to steadily build your credit score and eventually benefit from low interest rates and the ability to apply for better credit cards. As you walk that road, you should also know about the things that could hurt your credit score. And that’s what we are talking about today…

1. Hard Inquiries

Checking your credit can affect your credit score but only if it is the so called “hard credit inquiry.” This type of credit check is typically done by creditors when they want to see your entire profile in order to approve or decline you for credit when you are applying. Keep in mind that this is usually a small decline and temporary until you start paying your loan back. There are a few services that allow you to check your credit score to see if you have anything negative on your credit report without making hard inquiries.

2. Late Payments

You can be late to make a payment by 5 days or a month it won’t matter, having late payments on your report will have an impact on your credit score. Other consequences include being charged a late fee and increased interest rates on your account. Not every lender will report to the bureau, so don’t be surprised if it doesn’t end up on your file.

3. Loan Default

Missing a payment on a loan, whether student or personal, will have a negative impact on your credit score. Therefore, it is important to set reminders for yourself to pay your bills on time or you can potentially slip into a lower credit range bracket, limiting your ability to get new credit at low rates. Loan defaults remain on your credit history for 7 years, thus paying it back will be your top priority at that point.

4. Collections

Not paying your bills on time can make your debt end up in collections. For example, if you become delinquent on a debt, whether it is a medical bill or credit card bill, this type of debt can end up at a collections agency who will then try to recover that lost debt. Checking your credit from time to time could help you see whether there’s anything negative on your report.

5. Bankruptcy

Filing a Chapter 7 or Chapter 13 bankruptcy is common among those who cannot handle their debt and need a way out. The way this impacts your credit score depends on how your score was when you applied for bankruptcy — if you had a good standing, your score will dip quite a bit, while on the other hand if you already had fair or bad credit, the dip won’t be as significant.

Keep your eye on the score…

There are a few services that allow you to keep an eye on your credit score, such as myFICO and TransUnion. Both services will “deliver the goods” and provide you with the ability to know where you stand in the eyes of credit bureaus… and act accordingly. Good luck! 😉

Click here to read about the things that could HELP your credit score.

Also read: How to Dispute a Mistake on Your Credit Report