Personal Finance

The Ten Most Surprising Things That Might Hurt Your Credit Score

People dealing with debt already know the basics of maintaining their credit scores. Some common suggestions include not delaying payments, avoiding tax liens, foreclosures, and bankruptcies. However, there is a lot more you should know about your credit scores. Have a look at the following most surprising things that can hurt your credit scores:

1. Not Paying For the Parking Ticket

Your unpaid parking tickets can result in adding up to collection agencies. If you have got your record in collections, it can have a negative effect on your credit score. In order to close any budget gaps, a lot of municipalities have sent the information of unpaid parking ticket to collection agencies.

2. Closing the Old Account of Your Credit Card

Though you may think that it is a good idea to close your old credit card account, it can have adverse effects on your credit card history. Secondly, you can try other ways to get rid of additional debt.

3. Financing Money for a High-Involvement Product

Financing money on furniture and other high-involvement products is not a recommended practice. This is because it can hurt your credit utilization rate. When you purchase a couch on credit, it will result in affecting your credit limit. Therefore, you should avoid this. Managing money this way will give you more financial freedom.

4. Changing the Ratio of Your Credit Utilisation

If you are experiencing a dispute over your credit card, there are high chances that it could affect your credit score negatively. This is because lowering your credit line will simply mean that your credit utilization rate has been changed. This change can be for the worse.

5. Not Maintaining Your Budget

Making a budget and spending accordingly is an essential norm of managing personal finances the right way. However, not meeting this financial requirement can result in a financial disaster. If you get out of budget, you will have to live in debt. However, all you need to do is to live a debt-free life.

6. Making Use of Your Credit Card for Business Purposes

Previously, you and your business partner might think that your business activities related to the usage of your business credit card are not visible on the credit report. However, this is not exactly the case. Now, you need to submit personal guarantee when you apply for credit card for your business. This can affect your credit scores too.

7. Investing In Your New Phone

It is difficult to know which costs can add up and affect your credit scores. However, you can get a fair idea about it by talking to professionals. Buying a new cell phone requires you to submit a credit inquiry. Make sure each inquiry does not affect your credit score.

8. Transferring Your Money to Credit Unions

Many people prefer to transfer their money from large banks and institutions to small credit unions. If you are one of them, then you should be aware of the fact that this can also result in a hard inquiry. If you are concerned about the matter, you can ask them whether opening your account will include a hard inquiry in your own credit report or not.

9. Requesting To Increase Your Credit Limit

Though asking for a credit limit increase is an effective way to enhance your financial freedom, it can also have unfavorable consequences. This means that it can also be damaging for your credit score. Therefore, do not request an increase in your credit limit if it is on a short-term basis.

10. Using Your Debit Card to Rent a Car

When it comes to renting a car, many rental agencies will accept payments in credit cards. Debit card is another option you can look for. However, some of them have mentioned in their clause that they will check your credit scores if you want to use your debit card for payment.

You might also think that these things did not affect your financial situation previously. However, you never know when these can make you a victim of a financial setback. Therefore, keeping updated with the overall economic circumstances in crucial to maintain your credit scores. Moreover, taking care of the above mentioned ways will help you make sound financial decisions in the future.

Author’s Bio

CJ likes to help individuals make sound financial decisions in their personal and professional lives. Secondly, she likes to settle their debt issues by writing good content for them. She feels that best Debt settlement advice is available from the guys at Consolidate Credit.

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