Four Unexpected Behaviors That Can Impact Your Credit Rating

Banks Editorial Team · December 6, 2017

Find out what you’re overlooking that can affect your purchasing power

You probably don’t give much thought to your credit rating. It’s one of those parts of daily life that doesn’t come up in conversation very often. It’s not as common or immediate a concern as the balance in your bank account or your outstanding credit card balance, so it doesn’t get checked regularly. That doesn’t make it any less powerful or important, though.

While most people are generally aware of the big missteps that can negatively affect their credit rating, there are some hidden dangers that may surprise you. Knowing what these small, unexpected pitfalls are and how to avoid them can keep your credit history clean and set you up for success when the time comes to make a big purchase or make a major life change.

Be Careful With Credit Cards

Essentially any unusual activity involving your credit cards has the potential to hurt your credit rating. Be especially careful when making a lot of moves in either direction all at once, either opening new cards or closing multiple current cards in a short period of time. It can convey instability and unpredictably.

Pro Tip: Keep your oldest card open. Since that card was likely the beginning of your credit history, closing it could make your report appear shorter than it really is.

Manage Your Bills

It’s a pain to deal with the monthly deluge of bills. And you might be procrastinating on paying that parking ticket because you totally didn’t deserve it. Failure to address those open items in a timely manner can hurt you in the long-run, even if they aren’t ultimately sent to a collections agency.

Pro Tip: Small little things like unpaid gym memberships or library fines can be just as painful as something more serious like a missed rent or mortgage payment.

Balance Payments Effectively

You may want those loans or credit card balances hanging over your head gone yesterday, but there are advantages to your credit score to taking a slow but steady payment approach. Pay off too much too quickly and it can trigger concerns. Leave too much out there and it can be just as problematic.

Pro Tip: Ideally credit card balances should be 15-25% of your available credit, leaving room for emergencies but showing you reliably pay on time.

Diversity Is Important

For many people, credit cards likely make up much of their credit history and outstanding debt, at least outside of student loans. While a solid credit card history is good, your score can be hurt if that’s your *only* kind of credit.

Pro Tip: Explore different types of credit, including revolving and installment, to add a little flavor and improve your score.

How do you measure up in these areas? Knowing how each one influences your credit history can help you avoid behavior that can negatively impact your ability to buy a house, rent an apartment or buy or lease a car. Keeping each in mind establishes a track record of reliability and savviness that sets you up for future success.

Check your credit history today to see where you stand.

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