7 unexpected issues that could reduce your credit rating

One small step in the wrong direction can lead to a drop in your credit rating. About your experience correspondent says Money Talks News Allison Martin.

7 неожиданных ошибок, способных снизить ваш кредитный рейтинг

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It happened to me once because I got paid a check of 12.70 to the dollar. My failure was eventually transferred to the credit Agency. The result was a decline in my credit rating 80 points and several months of regret. Later the rating was restored, but this small oversight still haunts me.

In addition to the happened to me of failure, here are a few nasty bugs that can lower your credit rating:

1. The car rental booking

Planning to rent a car? If the reservation you use a debit card, a company engaged in car rental, may be subject to credit screening. This may affect your credit rating. A better option: confirm the reservation with your credit card, to avoid unnecessary request for credit screening. Then when you return the car pay the final bill to your debit card.

2. Closing credit cards

Closing account credit card sounds reasonable, but actually it can damage your credit rating, as it affects so-called utilization of the loan. This is the percentage of your available credit you are using.

This ratio affects your credit scores FICO and VantageScore credit scores. The lower your ratio — that is, the less available credit you use, the better will be your credit rating.

Closing credit cards you don’t use, reduce your available credit. This, in turn, increases the utilization of the loan and hurting your credit rating.

3. Overdue rental payments

Don’t pay rent on time and the landlord can report your infraction to the credit bureaus. If you have any problems with the rent to meet with the landlord and propose an alternative payment plan. So you can save your good name and credit.

4. Non-payment for recurring payments

If you are even slightly overdue account from the provider of the communication services or utilities, chances are you will receive multiple notifications before service will be discontinued.

But as soon as the payment reached a critical point, the service provider will transfer the debt collectors and then report to the three major national credit companies — Equifax, Experian and TransUnion. Do not ignore correspondence and Unliquidated obligations.

5. Violation of membership conditions in the gym

Even if you are tired of wasting hard earned money every month on a gym that you are not using, you can’t just leave. First, close the account, otherwise it could cost you penalties for early termination of the contract and lead to lower credit rating.

6. Unpaid medical bills

If you have any problems with paying bills for medical care, make sure you timely solve this problem. for example, request a payment plan. Ignoring collectors by turning off the sound on the phone may eventually lead to problems in your credit report.

Due to changes in the credit industry, declared a few years ago, medical debts are only recorded after a 180-day waiting period, intended for insurance payments. And in General, credit reporting agencies paying less attention to outstanding medical debts. However, timely medical billing service can help you avoid the downgrade.

7. Excess applications for credit card

10% percent of your FICO credit rating is determined by how you shop for the loan. According to Fair Isaac Corp. or FICO:

“People today have more loans and take new loans more often than ever. FICO results reflect that reality. However, research shows that opening several new credit accounts in a short period of time represents greater risk — especially for people who do not have a long credit history.”

Remember this the next time you are offered a credit card at the cashier as part of the transaction, which may save you significant money on your purchase. This one-off saving can be costly, leading to a decrease in your credit rating.