Surprising Ways That You Can Hurt Your Credit Score
Posted on December 21, 2013 by Michael Martin Leaño
By now, you probably already that you can easily hurt your credit score by making late payments on your credit card, going over your credit limit, and defaulting on your loan. However, did you know that there are other less-known ways to do so? Here are some surprising examples:
Way #1: Getting divorced
Getting divorced doesn’t hurt your credit score directly. The problem comes from jointly held debt, which still needs to be paid regardless of marital status. Unfortunately, divorce can cause confusion on who should settle joint debts or makes exes unwilling/unable to pay. Because of this, payments are sometimes late or missed completely. When this happens, both credit scores are affected. To fix this problem, provide the creditor with a copy of your divorce papers, which should state who is responsible for paying what.
Way #2: Not paying your medical bills
Like divorce, not paying your medical bills doesn’t automatically lower your credit score. However, health care providers could send your account to collection agencies or report it to credit bureaus. This problem is avoidable: if you can’t pay everything outright, put in a huge chunk and your health care provider might even give you a discount. You can also pay instalments with interest.
Way #3: Unpaid library fines
Did you know that there are libraries that have reported unpaid fines to credit bureaus and collection agencies? Once these organisations get wind of your overdue books and huge unpaid fines, expect it to be part of your credit report.
Way #4: Renting a car
There are some car rental companies that perform hard inquiries on your credit report if you use your debit card. Not all do this, but those that do can take a few points off your credit score.
Way #5: Being late for utility payments
This doesn’t happen immediately, but if you’re always late for your utility payments, your provider could report you to collection agencies and/or credit bureaus. The scary part is that it can happen to anyone since bills sometimes escape our notice, like when we move to another house.
Way #6: Paying your rent late
Paying your rent on time doesn’t affect your credit, but being late does, especially if the owner gets tired of your chronic lateness and decides to sic the credit bureaus and collection agencies on you.
Way #7: Closing a credit card account
Before you close that unused credit card account, look should first look at your credit utilisation ratio, which refers to your total debt compared to your total available credit. Once you close the account, your total available credit becomes smaller, but your total debt stays the same. And when this happens, your credit utilisation ratio increases, your credit history shortens and your credit score would then go down.
Way #8: Co-signing a loan
Co-signing a loan means you’re committing to paying off the loan if the borrower fails to do so. And if that happens, your credit score would take a significant hit. To avoid this, you should require the borrower to always pay a month in advance, and then furnish you a receipt each time. That way, you would have enough time to help out and protect your credit rating.