Most people are aware of the obvious things that affect their credit score. However, there are a number of unexpected ways you may be hurting your credit rating which you need to understand. If you are trying to rebuild or improve your credit score, keep an eye on these lesser-known credit rating influences.
No Limit Credit Lines
One of the things that credit reporting agencies look at when calculating your credit score is how much of your available credit is utilized. The credit limits listed by each card or other lines of credit are used to determine this, and a credit card with no set limit is seen as a $0 limit by the agencies. This will make it seem as though you are over the limit on these cards, which will hurt your credit score more than you may expect.
Fines, Parking and Speeding Tickets
Debts owed in the form of parking tickets, speeding tickets and other fines issued by the local or federal government will ultimately impact your credit score. Government organizations, such as the police and library, do not forgive debts no matter how small. After a certain period of time has passed without payment, the debt is moved to a collections agency which will report the unpaid amount to the credit reporting bureaus.
Lower Repayment
Collection agencies will often allow you to pay less than you owe if you make the lower repayment in full. While this practice will remove the debt from your credit report, the amount you weren't required to pay can be reported to the reporting agency as a charge off that negatively affects your credit score. When you negotiate the lesser debt settlement amount with the collectors, try to request the charge off to not be reported in order to avoid hurting your credit.
Unnecessary Hard Credit Checks
When someone other than you initiates a check of your credit score, it can result in what is known as a “hard credit inquiry.” Hard credit inquiries have a small negative impact on your score, and too many unnecessary checks will add up. Try to avoid applying for cards you don’t need to get a free gift. You should also refrain from asking friends in the financial industry to look up your report.
It is important to understand the unexpected ways you can hurt your credit score. Pay attention to the debts you owe and the terms of repayment while managing your credit rating.
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