8 Surprising Behaviors That May Hurt a Young Person’s Credit Score – Part 1
Can you relate to any of these scenarios?
– You have stellar credit record the moment your are out of college.
– You had some trouble with your credit in the past (perhaps you mismanaged a personal loan or your credit cards) and you are now putting together a credit repair plan to turn your credit back to optimal status.
In both of those scenarios, you are either in a good credit position or about to be. However, while recovering your credit score might require discipline, it is not that hard if you stick to your plan. On the other hand, keeping it intact is what requires a lot more work, and a lot more precaution.
In fact, if you have a heathy credit score you need to always be careful that none of your actions might negatively affect it. This is trickier than it sounds though, since even some simple money moves can hurt your credit score and make it even harder to recover its former status.
That said, here are eight lesser-known financial actions that can actually damage your credit score and that you should be aware of:
1. Opening a New Bank Account:
If for some reason you choose to switch banks or other financial institution for acquiring a personal loan or just for saving, be prepared, since this will negatively affect your credit score just lightly, making it drop somewhat. The reason for this is that nowadays almost every financial institution performs a credit check before granting you even a checking account. This shows up as a hard inquiry on your credit record, affecting it somewhat negatively. So don’t forget to consider this factor if you plan to change banks and if the move will make it worth it.
2. Ignoring Traffic Tickets Can Be Risky:
Let’s say you got a few traffic tickets while you were in school and now you could easily pay them if you wanted. Why bother right? Wrong. The best thing you can do is to pay them as soon as possible, otherwise they will show up on your credit report. In fact, all traffic violations, even parking and speeding tickets are eventually reported to credit bureaus once they remain unpaid for a while, so paying them as soon as possible (even if you have to acquire a small personal loan for that) is the best course of action.
3. Fancy a New Cell Phone?:
Yep, you read that right, despite being a necessity, even getting a brand new cell phone and signing up for a phone contract could affect your credit score. The reason? Like banks and financial institutions before granting you a personal loan, cell phone providers also require a credit check when signing on a new customer. This means that your credit report will be slightly affected in a negative way due to the hard inquiry that the phone operator performs. So, if by any case you are planning on getting a personal loan or something like that, hold off on signing a new cell phone contract until your personal loan gets approved.
4. Missing Out On Your Student Loan Payments:
If you acquired a student loan in order to make it through college, don’t be fooled into thinking it is “good debt”, because despite being an investment, a loan is a loan and missing out on your payments will drastically downgrade your credit score. The best you can do in this case is to sign up for automatic debit payments with your loan provider so you never miss another payment. If for some reason it is impossible for you to pay at the moment, then visit your personal loan provider and negotiate other terms. it might affect your credit score as well, but it won’t be that much.
There you go. Make sure to check back tomorrow to learn about the remaining four behaviors that can hurt your credit score.