UNEXPECTED THINGS THAT AFFECT YOUR CREDIT SCORE

One’s credit score works a report card in the financial terms and financial world. It opens the gate for numerous things like a new car, credit card, house ownership and so on. But are you aware that there are unexpected things that affect one’s credit score?

The unexpected things that affect your credit score are as follows:

• Unexpected Credit Inquiries
  
  • Every application that you make for credit will affect your credit score.
    
  • Also, it will be reflected on your credit report for two years.
    
  • Thus, making unexpected credit inquiries affect your credit score.
    
    
  • Not only this but renting a car, requesting credit line increase, opening new bank accounts or opening cell phone plan all amounts to hard inquiries to one’s credit score.

• Inactivity
  
  • It is advisable to charge your credit card with the smallest amount, i.e., 10 percent to 30 percent of your credit limit.
    
  • Also, if you do not charge your credit card, it will help you to lower down your debts but will affect your credit score.
    
  • If there is inactivity, there are chances that your credit issuer might close that account.
    
  • It will lower down your available balance and also your account age.
    

• Using Business Credit Cards
  
  • There was a time when business credit cards were just in the business.
    
  • Business credit cards nowadays require a personal guarantee from the account holder as this rule is not applicable anymore
    
  • Thus, each charge on one’s business card will affect their credit score.
    
  • Also, by charging a lot onto your account will lower down your utilization which will lower down your credit score.
    
• Credit Card Disputes
  
  • When an account is disputed, the credit algorithms may not add that credit line into your credit score
    
  • Thus, applying for credit while you dispute an account can have unexpected results.
    
  • It depends on the accounts that are disputed.
    
  • You may lower down your credit score or increase utilization.
    
• Not Reporting Credit Limits
  
  • One’s total balances and their available credit affect their credit score.
    
  • When your credit card doesn’t reflect the limit of your card, it seems like you reached the max limit of the card.
    
  • It is advisable to contact your issuer and ask them to report your limit amount.
    
• Closing Old Accounts
  
  • The age of one’s credit accounts affects their credit score.
    
  • It comprises about 15 percent of your score.
    
  • Keep your old accounts to maintain a healthy credit score.
    
  • As closing your unused accounts or old accounts will lower down your credit score.
    
• Paying Old Debts
  
  • Settling down your old debts helps you to improve your financial situation, but it affects your credit score negatively.
    
  • As this entry will suddenly pop-up on your credit report and will lower down your credit score.
    
  • This might also re-age the account which means this will appear on your credit report for long.
    
• Credit Counselling
  
  • Credit counseling doesn’t affect one’s credit score.
    
  • But credit score might lower down when your credit counselor starts settling your debts.
    
  • Then the account is noted as a partial or settled payment.
    
  • Also according to Credit Sesame, debt settlement affects your credit score negatively.
    
• Debt Settlement
  
  • Settling a debt with a creditor affects your credit score adversely, even though you save money.
    
  • As the account will reflect that the amount paid is less than the amount you owed them.
    
  • This is considered as a negative entry for your credit score.
    
• Divorce
  
  • Obviously, filing for divorce won’t hurt your credit score. But the separation of credit could affect your credit score.
    
  • For instance, if you are a co-signer of an account. Then you rely on your ex-spouse to pay the bills, or you have to pay.
    
  • Any failure to pay the bill will amount to late payments.
    
  • It will affect your credit score.

SEE ALSO: Mistakes That Can Ruin Your Credit Score