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Oh, the credit score. It’s that three-digit number that rules every financial decision for many people. While this magic number seems self-explanatory – you fail to pay your bills, your credit score decreases – you might be surprised at some of the other factors that affect it as well.
To help you understand more about your credit score, so there are no shocks to the system the next time you check it, here are several surprising things that could be damaging it.
- Making Late Rent Payments
While it is a fact that paying a mortgage installment late will result in a negative report to the credit bureaus, past-due rent payments may also have the same effect.
Your landlord has the right to report your late rent payment to the credit bureaus, so if you know you are going to be late, talk to them about it. Try to work out a payment plan to get caught up or consider low-interest fast loans to make ends meet.
- Renting a Car
If you make a car rental reservation using a debit card, you may be subjected to a credit history report, which can lower your credit score a few points. If you need to rent a car, consider using a credit card to make the reservations to avoid the damaging credit check, and then use your debit card to pay the final bill when you return the car.
- Closing a Credit Card
It may sound like a good thing but closing a credit card you don’t use can actually hurt your credit score. This is because of something called your credit utilization ratio, which is the percentage of available credit you are using. The lower your credit utilization score – or the less of your available credit you are using – the better your credit score is.
Closing a credit card decreases your available credit, which in turn, increases your credit utilization ratio, ultimately damaging your credit score.
- Failing to Pay Recurring Bills
If you are even a few days late in paying a cell phone bill, the electric bill, or the gas bill, the company will not hesitate to send out notices and warnings to pay the charges or they’ll shut your service off. You may receive several such notices before this actually happens.
When the company has had enough of your tardiness though, they are likely to send your account to collections and report your neglect to the three major credit bureaus: Equifax, TransUnion, and Experian. To keep your credit score in good standing, avoid defaulting on these recurring bills.
- Breaching a Gym Membership Contract
You meant well when you signed that gym membership contract, but it has been six months and you have yet to visit the gym even once. Rather than ignore the notices and phone calls for your monthly payment, do your credit score a favor and close your membership the honorable way. While there may be an early termination fee, you will avoid the collection notices and your credit score won’t take a hit.There are a lot of things that can affect your credit score without you even knowing it. From being lazy about rent and bills to reneging on a gym membership, these seemingly insignificant decisions can damage your credit score quickly. Hopefully, the tips above will help you realize the impact these factors have on your credit rating and help you keep it in the best shape possible.