11 Surprising Ways to Wreck Your Credit Score

A seemingly small stumble -- such as forgetting to return library books -- can cause your credit score to plummet.

6. Defaulting on recurring bills

If you are slightly past due on a bill from a cellphone or utility company or other provider of recurring services, chances are you’ll receive several notices before services are terminated.

But once the provider has had enough, expect to be turned over to debt collectors and subsequently reported to the three main nationwide credit reporting companies — Equifax, Experian and TransUnion. Don’t ignore correspondence or fail to settle outstanding obligations.

7. Breached gym membership contracts

Even if you are tired of forking over hard-earned cash each month for a gym membership you aren’t using, don’t just walk away.

Properly close the account, or it could cost you in the form of early termination penalties and a damaged credit score.

8. Unpaid traffic citations

Most of us are aware of the consequences associated with ignoring tickets issued by law enforcement. But what about tickets issued by parking services at the local university or the downtown street patrol?

Ignoring citations and failing to pay them could show up as a collection in your credit profile.

9. Closing credit cards

Closing a credit card account sounds smart, but in fact it can hurt your credit score. In fact, it’s cited in “The 10 Most Common Credit Card Sins.”

Closing an account impacts what’s known as your credit utilization ratio: the percentage of your available credit that you are using. This ratio affects both FICO credit scores and VantageScore credit scores. The lower your ratio — meaning the less of your available credit you’re using — the better your credit score will be.

Closing a credit card account that you’re not using would decrease your available credit, however. That would in turn increase your credit utilization score, hurting your credit score.

10. Too many credit card applications

Ten percent of your FICO credit score is determined by how you shop for credit. According to Fair Isaac Corp., or FICO, the company behind FICO scores:

“If you have been managing credit for a short time, don’t open a lot of new accounts too rapidly. New accounts will lower your average account age, which will have a larger effect on your FICO scores if you don’t have a lot of other credit information. Even if you have used credit for a long time, opening a new account can still lower your FICO scores.”

So, remember that the next time you’re offered a store credit card at the checkout counter as part of a deal that could save you some significant cash on the purchase. The price of that one-time savings might be a lower credit score.

11. In-house zero-interest financing

Strapped for cash but in desperate need of that new mattress or laptop? It might be tempting to take advantage of zero-interest financing if it’s offered by the seller. But if the credit line is only equal to the total purchase amount, be prepared for a spike in your credit utilization ratio.

Have you experienced a surprise hit to your credit score? Tell us about it by commenting below or on our Facebook page.

Allison Martin
Allison Martin @amthewriter
After spending years as a governmental accountant, I decided to transition into the world of freelance writing. When I'm not busy writing, I enjoy mentoring mommy-preneurs and helping others manage their finances. ... More

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