7 Strange Ways in Which Harm Your Credit Score – Part 1
Perhaps one of the best-kept secrets of the financial world is the FICO credit score equation. In fact, just search the web for it and you will find literally thousands of articles claiming to show you what are the do’s and don’ts when it comes to improving your credit score so you can have more chances when applying for a personal loan. Of course, most of these are pretty obvious, like repaying all your personal loans in time and not abusing your credit cards as ways to not harm your credit score.
However, there are several ways that in which people can end up hurting their credit scores that are completely unknown and plain weird, with a lot of people not understanding how their applications for personal loans were not accepted and finding out later on.
So let’s take a look at a few of them so you can avoid hurting your credit score inadvertently.
1. Closing or Canceling Your Credit Cards
Perhaps one of the most known ways to inadvertently hurt your credit score and you ability to apply for personal loans, closing your credit cards is not week seen by banks or other financial entities at all. For most people though, this simple act of financial housecleaning has a series of consequences. To start, closing your credit card will immediately cause your credit limit to drop, which in turn will increase your credit utilization, which is bad for your credit score.
Now, if the card you are closing is older than the rest of the credit cards you have, then the average age of all your existing accounts will also decrease, which is also detrimental to your credit score. Of course, closing a credit card will never be as bad for your credit as, say, not paying your personal loans, but it can definitely make a difference on your credit score for the worse.
2. Not Filling Out a Form When Your Move
Whenever you move to a new home, one of the most important things to do is to report your address change to the country’s Postal Service. Otherwise, you risk on missing sensitive mailings, like credit card statements and other important bills and legal documentation. This of course, might cause you to start getting behind on your personal loan payments, which naturally, affects your credit score.
In fact, there are many credit card companies that will report you as soon as you are just but a few days late on paying your personal loans. Not only that, but you also risk getting your identity stolen by whomever take on your last residence and starts getting your mail.
3. Requesting a Credit Score Report
Be careful if you have friends who have good positions at banks, especially if they are working in the areas of personal loans and lending, since you might be tempted to ask them to take a look at your credit score. Of course, this might be like the reasonable thing to do. After all, why go through the official channels or pay for your credit score information when friend of yours can see it for you and know if your personal loan debts are in good shape right?
However, this can hurt both your friend and you, since he will be misusing the company’s resources. On your side, this process might register as a hard inquiry on your credit report, which in turn will affect your credit score quite negatively. So whenever you feel like knowing about the status of your personal loans and of your credit score, better do it through the official information channels.
Tune in to the site tomorrow for the remaining four, odd ways in you can inadvertently harm your credit score.