Okay, so you want to know what certain things you can do that can actually hurt your credit score. This a wise decision indeed. Perhaps soon you plan on purchasing a property in the Brisbane region because of a number of great communities sprouting in its vicinity – and for this, you need a positive score. And higher is always better. If you want to push it higher, it’s time to be more vigilant and watch out for things you do that is actually hurting your credit score.
Let’s round them up!
Asking for credit limit reduction. Keeping your credit limits high is a good way to build good rating. In a nutshell, it’s a mistake to decline a bank’s offer to increase your credit limit. You might be thinking that you don’t need it and that it’s good to decline it altogether. It’s not. What you can do is resist the temptation to increase your spending when your credit limit increases.
Not using your credit cards. If you own a credit card account that’s in good standing but has absolutely no activity over extended periods of time, its issuer may decide to simply close your account because of inactivity. If you don’t use it, chances are you will not notice that your line has been cancelled until your credit score suffers a hit. The reason why inactivity would hurt your score is that it will negatively impact your credit utilisation ratio.
Not having different types of debt in your card. Any credit cards or loan you use to borrow and repay your debts will help in building a good credit standing. Also, the more types of accounts you open and the richer your mix of credit, the more you will boost your score.
While owning credit cards is a good thing, lenders will want to see that their borrower can handle a mix: credit cards, loans, lines of credit, etc. Aside from getting a credit card, choose secured loans to build credit.
Not checking your credit. Multiple hard inquiries from lenders can damage your credit. Some consumers believe that it could also damage their credit when they check their own reports. However, this is a myth since credit inquiries you requested are documented separately from those requested by servicers and lenders. Checking your credit report goes a long way in maintaining a good credit history as this allows you to catch mistakes as well as signs of identity theft quickly.
Closing an old credit card account. It may seem like a great idea to simply cancel an old credit card, but doing so will decrease the length of your credit history and then increase your credit utilisation rate. These will, in turn, lower your credit score. Credit experts commonly suggest you avoid closing your oldest credit card because a long credit history is an asset you can use in the future, something you’ll want to hang on to.
The Bottom Line
Take note that the rules governing your credit are dynamic, which means it can change from time to time. Something that will not have an effect on your credit today or several years ago could now be a factor. Therefore, always keep yourself updated on which actions can trigger a negative credit score.