5 Counterintuitive Ways You Can Ruin Your Credit
1. Closing Old Credit Cards – Many people have old credit cards
cluttering up desk drawers that are not really needed anymore. But before
you close an old card you never use, understand that the length of credit is
one factor of good credit, so closing an old card could lower your score.
2. Paying Off All Debt – Lenders like to see that you can manage debt.
Paying off all debt can lower your score. Keeping a small, manageable
balance and regular payments might be a better strategy.
3. Co-Signing Loans – Helping someone by co-signing a loan might
seem like a generous offer but understand the risks. If they miss even one
payment, that bad debt will show up on your credit report and could
dramatically affect your credit score.
4. Applying for Credit – If you are considering a new car or home loan,
you may think applying to multiple places is the responsible thing to do. Too
many inquiries in a short amount of time can lower your score.
5. Ignoring Small Bills – Take all your bills seriously. Even small bills like
cable or the pool service could end up in collections if not paid on time. A
collection can negatively impact your credit score for up to 10 years.
Taking your credit seriously is only the first step. Understanding all the
unintended ways you can damage your score is the best way to protect
your credit and financial health.
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