Surprising Things that Can Damage your Credit

Most consumers know the importance of keeping their credit score as high as they possibly can so that they can avail of loans and credit at low interest rates and good payment terms. This is the reason why people do not keep their credit card bills pending and avoid things such as tax liens and accounts in collections. However, there are many other actions that may seem completely unrelated to your credit rating, but can in fact damage your credit considerably.

Top 4 surprising things that damage credit ratings

Here is a list of the top 4 actions that can result in your credit score taking a major hit:

• Not paying your parking tickets: In recent months, many municipalities have begun to send unpaid parking tickets to collection agencies. These collection agencies consider unpaid parking tickets to be accounts in collections, which can impact your credit score negatively. Hence, make sure you pay off all your parking tickets, even those that you may have incurred in states other than your home state.
• Using debit cards: It makes perfect sense to use a debit card for purchases so that you do not increase your credit card outstanding unnecessarily. However, if you do use your debit card to rent a car, you could be in big trouble as far as your credit goes. Car rental agencies generally initiate a credit inquiry on any person using a debit card so that they can ascertain their creditworthiness before renting out their cars. Such an inquiry on your credit report can lower your credit score dramatically. 
• Cancelling a credit card: Another surprising thing that can really impact your credit score negatively is cancelling a credit card or closing one that has no outstanding balance. You would think doing so would be better for your credit as you now have lesser credit cards, right? However, since your credit score depends on your credit history, closing even one card can lower this history and subsequently lower your credit rating.
• Buying a mobile phone: There is no way consumers could even imagine that simply buying a new cell phone could lower their credit. However, when you purchase a new cell phone, this typically initiates a hard enquiry on your credit report. While one enquiry may not impact your credit negatively, if you have had multiple purchases and multiple enquiries in recent days then this can damage your credit significantly. Hence, consumers should ensure that they space out major purchases that could initiate credit enquiries.

Esther is a business blogger and journalist from Illinois. She regularly blogs about all sorts of business and legal issues, covering everything from business brands to mortgages and from umbrella companies to finance. She also writes for an Illinois injury attorneys blog.