You would be surprised at a few of the things that can damage your credit. Often we take measures that we think are best for our finances and our budget but these very same things can negatively affect your credit score.
For example, if you are not using a credit card you might think it would be a good idea to go ahead and close the account. But if you do that it will negatively affect your credit score. Much of your score is based upon the available credit that you have compared to how much you are using. If you close the account then that amount is no longer available to you and your debt to credit ratio goes down, negatively affecting your credit score.
The same thing can happen if you have a credit card but you don’t use it. Vendors can cancel an account for non-use and if they do that available credit is gone and your debt ratio goes down along with your credit score again.
Another consideration is how much of your credit that you use. If you have a large running balance on your account it affects you negatively, even if you pay it off every single month. Try to keep your borrowing below the 30% of what is available mark. The running balance holds more weight than the fact that it is regularly paid off.
Library fines and parking tickets may seem benign but they can end up on your credit report if you ignore them, the same for overdue recurring bills such as a cell phone or a utility bill. As soon as a bill is referred for collections it can show on your credit report as a negative.
When you apply for credit a hard inquiry will show on your report. If you have too many inquiries it is a negative for your score. Revolving credit such as department store cards is also looked upon as more negative than other types of credit such as a car loan or a mortgage. It is probably not worth the 20% off that they give you on your purchase to apply for their credit card.
You would be wise to check your credit report on a regular basis. It has been reported that as many as 75% of all reports contain mistakes and inaccuracies. If you check your report regularly you can dispute the issues immediately and you won’t have a problem when you do need credit. You are entitled to one free report each year from all three of the major credit bureaus. You should take advantage of that and make sure that your credit report is correct and accurate.
The best way to maintain your good credit is to avoid any problems in the first place. Even so, you may still occasionally find mistakes on your report. You can dispute them to repair your credit with the assistance of a professional credit repair service or you can do it on your own.
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