8 Surprising Behaviors That May Hurt a Young Person’s Credit Score – Part 2
Yesterday we took a look at some of the behaviors that could hurt your credit score and that sometimes are completely overlooked by people. These ranged from simple things, such as not paying a parking ticket or even signing up for a cellphone contract to more obvious ones, like lagging behind on your student or personal loan payments.
Today we take a look at the remaining 4 behaviors that, if you don’t watch carefully, might end up harming your credit score quite dramatically.
5. Canceling a Gym Membership:
If you are the member of a gym and for some reason your decide to take a break from it, you have to make absolutely sure that you follow the gym’s membership cancellation procedures. Otherwise you risk suffering a slight drop in your credit score. It really sounds quite unbelievable, but most professional gyms have several cancelation clauses that resemble those of banks, eve stating in most cases the exact dates before which cancellation of a membership is impossible. Other clauses include stopping your automatic payments without warning and such. All of this is reported to the Credit Bureau and will directly affect your credit score.
6. Choosing to Close a Credit Card Account with Zero-Balance:
Let’s say that with a lot of effort and dedication, you managed to pay your student or personal loan or any other debts that you accumulated in the past. Naturally, the next step in your plans might be to start your financial life all over again and with a clean slate this time. However, having those open lines and clean credit cards might tempt you to get rid of them close them all. But beware, keeping your credit cards open even with zero-balance can actually be quite positive when it comes to keeping a good credit history. What you can actually do is to use those active credit cards to make small purchases and transactions and then pay off their balance before the end of the month, which will actually improve your credit score slowly by a few points.
7. thinking about Applying for More Credit:
As we have mentioned above, banks have become more and more paranoid with time, with means that even is you sport a spotless credit history, requesting a new credit card or asking for a personal loan will definitely trigger a hard inquiry on your credit report. Hard inquiries, of course, lower your score, so if you want to apply for a new personal loan or something of the sort, completely forget about applying more than once every month, otherwise your credit score will fall experience a severe decrease. Remember, any sign that you might be in trouble and needing some money will raise countless red flags to any future lender.
8. Renting a Car:
While it is not as common as with banks and gyms (unbelievable right?), some car rental companies also tend to runs a credit inquiry every time someone goes to ask for a car rental. The funny thing is that those car rental companies do this even if you pay with your debit card to secure the vehicle. Because of this, please make sure to always read the fine print of the terms and conditions agreement every time you apply for a car rental. In addition to that, feel free to ask the agency what their policy is for new customers.
There you go, eight different ways in which you might unintentionally be lowering your credit score, affecting your future needs and savings. Remember, any type of hard inquiry—not only for personal loans or credit cards, but even for simple transactions— will drop your credit score by a few points, so always ask and be informed before making a transaction.