Many of us have heard about some of the traditional ways an individual can damage his or her credit score, including excessive applications for credit and failing to pay bills on time. What many do not know is that there are a ton of things that can impact your credit score – for better or worse. In this article, we will be covering some of the biggest no-nos that you may not have heard of so that you can avoid making these mistakes when it’s imperative for your credit score to be pristine condition.
Don’t Cancel The Cards Just Yet
About to apply for an auto loan or home mortgage? Don’t cancel any of your credit cards for any reason, as this will lower your credit utilization score (the amount of credit debt relative to available credit) and even though you may be doing the fiscally responsible thing, it will make you look like a higher risk in the eyes of lenders. Also measured is the average age of your credit cards; cutting off an older credit card can have an impact on this number and make you look more like a “novice”.
Pay Your Traffic Violations
Nobody really thinks about what happens to unpaid traffic fines and penalties, especially if they were accrued in another state. With local governments strapped for cash, many of these debts will be sent to a collection agency if left unpaid. These debts then become attached to your name and hence, your credit score. Always pay the fines, regardless of circumstance, and keep your credit from suffering at the hands of collectors.
Settling Past Debts For Smaller Amounts
Whenever you have a collection agency holding your debt, it is common practice to negotiate and pay the debt off for a lower amount than was originally owed. Unfortunately, doing this can lead to the remainder of the debt being written off yet again and appearing as a new charge on your credit. While it doesn’t make sense to receive a penalty for making a payment on debt, this is often the case. You can discuss not having the agency charge off the remaining debt in exchange for paying but this is normally only done if you specifically request it.