The next time you check your credit score, you might discover it has taken a tumble because of a seemingly small mishap on your part.
This happened to me once because I misplaced a bill for a whopping $12.70. My nonpayment ended up being reported to credit bureaus, also known as credit-reporting agencies.
The result was an 80-point decrease in my credit score and several months of regret. My credit score rebounded, but this small oversight still haunts me.
With my precautionary tale in mind, here are some other types of mishaps that can damage your credit score:
1. Car rental reservations
Planning to rent a car? If you use a debit card to make the reservation, the rental car company might require a credit screening. That can ding your credit score.
Here’s a better option: Confirm the reservation with your credit card to avoid the unnecessary credit inquiry. Then, settle the final bill with your debit card upon returning the vehicle.
2. Past-due rent payments
Fail to pay the rent on time, and the landlord might report your delinquency to credit bureaus.
If you’re having trouble with rent, meet with the landlord and propose an alternative payment plan until you’re caught up. That way, you can salvage your good name and credit.
3. Outstanding medical bills
If you’re having trouble paying medical bills, make sure you promptly tend to the matter. Negotiate or request a payment plan, for example.
Ignoring collectors by muting the ringer on your phone or sending their calls to voicemail can eventually result in a blemish — in the form of a collection account — on your credit report.
Due to credit industry changes announced in 2016, medical debts are reported only after a 180-day waiting period designed to allow enough time for insurance payments to be applied. And it’s possible to get a credit reporting company to remove medication collections from your credit report once the debt is paid or is being paid by the insurer.
Still, tending to medical bills promptly can help you avoid a credit blemish in the first place.
4. Delinquent tax obligations
Did the Internal Revenue Service or the local tax collector send you a hefty bill for unpaid taxes? You can run, but you can’t hide. They will eventually track you down and demand what they’re owed.
If you fail to respond and work something out, expect your credit score to take a dive. If you don’t want to or can’t work out a payment plan with the IRS, let a reputable expert help you with your tax debt.