Five Surprising Things that Hurt Your Credit

Five Surprising Things that Hurt Your Credit

Building and maintaining healthy credit opens up the door to many opportunities, including a lower cost of borrowing money, lower rental deposits, and smaller monthly payments when purchasing a car or home. While it takes awhile to build credit, it doesn't take long for your credit score to plummet. Here are five surprising things you could do to harm your credit score.

Things That Harm Your Credit Score

APPLYING FOR EVERYTHING AT ONCE

Moving is exciting! But if you're applying for an apartment, cable, utilities, and a car lease all at once, it will impact your credit score. The average person should not have more than one or two credit checks per year. If you're living with roommates, split up the responsibilities: that way, you'll all benefit from healthy credit!

Things That Harm Your Credit Score

HAVING ONLY CREDIT CARDS OR LOANS

It's good to have a mix of credit - both loans and credit cards. If you have only one type of credit, it might affect your score. Mix of credit is 10% of your credit score.

Things That Harm Your Credit Score

APPLYING FOR MULTIPLE CREDITS AT ONCE

Whenever your credit score is checked, it affects your credit. Credit inquiries account for around 10% of your credit score. Making several credit or loan applications in a short period of time might cause your score to drop.

Things That Harm Your Credit Score

HOLDING HIGH CREDIT CARD BALANCES

Just becuase you have a $15,000 limit on your card, doesn't mean you should max it out, even if you're paying it off in full every month. Try to only use around 30% of the credit you have available.

Things That Harm Your Credit Score

CANCELING YOUR EXISTING CARDS

If you've paid off the balance of a credit card and you're ready to close it, think twice. Canceling a credit card reduces your total credit amount, which raises your credit utilization ratio (the amount you're able to borrow versus the amount you have actually borrowed.) It can also shorten the age of your credit history. The longer a record you have of on-time payments, the better your score will be.

HOW DO I BUILD MY CREDIT?

Whether you’re looking to build credit for the first time, build your credit quickly, or fix your credit, there are a number of steps that you can take to get your score where it needs to be for the best financing terms. Read more here.