Having good credit can be a significant accomplishment and allow you larger financial opportunities. However, there are a few unexpected ways that can hurt your good credit.
1.One Late Payment
So you got busy with life and forgot to send in your car payment. Having one 30 days late payment report on your credit report can significantly drop your credit score, and depending on your credit history it could drop it by 100 points.
2.Closing your zero-balance credit card
Paying off your credit card is wonderful, and you may be tempted to close that account. Closing a zero-balance credit card can affect you one of two ways, it reduces your total credit amount, which can raise your credit utilization ratio. It also can shorten the age of your credit history.
3. Co-Signing
Co-signing for a friend or family with less than perfect credit makes you responsible for the debt. When your friend or family member misses a payment, it will report on your credit report. You will take full responsibility for that account if they do not pay.
4.High Credit Balances
You have the right mix of credit, perfect payment history, but you are reaching the credit limits on your credit card. Having high limits can cause your score to drop, it is important to try and keep them at 30% of the available balance. The lower, the better.
5.Applying for additional credit
Every time you apply for new credit or a credit increase the creditor will do a credit check. These credit checks are considered hard inquiries. Be careful when applying for credit or asking for an increase to an existing credit card.
6.Not paying attention to your credit report
Approximately one in five Americans have errors on their credit reports. It is important to check your report at least twice a year to make sure all information is reporting accurate. One reporting error could lead to major problems and possibly lower your scores. By law, Americans are allowed to one free credit report per year from all three credit reporting agencies, Equifax, Experian, and Transunion. You may receive your free reports at annualcreditreport.com.
