Little-Known Things That Hurt Your Credit Score
Previous-
What Hurts (and Doesn't)
You already know that the higher your credit score the better. And you probably know the basics for keeping your score high -- pay your bills on time, don’t carry too much credit card debt, etc. But you might be surprised at some little-known factors that can do some serious damage to your score.
Click through our gallery as personal finance experts Ken & Daria Dolan reveal eight credit score "no-no's" that pack a real wallop.
Next: Little-Known Factor No. 1 -
Parking Tickets
And Library Fines
Yup, that $3.45 late fee from the library can single-handedly knock down your credit score. More and more local governments are reporting unpaid parking tickets, library fines and such to collections agencies and that can really hurt your score as you'll see on the next screen.
Next: Little-Known Factor No. 2 -
Collections, Liens
And JudgementsThese have a big negative impact on your score, no matter how small the amount. And they hurt for a long time. Even if you pay off a collection, it stays on your report for seven long years -- tax liens for 15. Don't let that happen. Your payment history counts for a whopping 35% of your score, so take care of any outstanding fines, and work with creditors to avoid your debt being turned over to collections in the first place.
Next: Little-Known Factor No. 3 -
Being Responsible
It's crazy, we know, but in credit score land, you are punished for being responsible with your money. It can actually hurt your score if you pay off your balance in full each month or simply don't charge things on credit. Depending on the way your score is calculated (different agencies use different formulas) these can be negative factors since 10% of your score is based on the type of credit you have and 35% is based on your payment history. That doesn’t mean you should stop paying off your balance or start charging everything!
Next: Little-Known Factor No. 4 -
Shopping for a Loan
If you are shopping for the best rate on a mortgage or car loan, be sure to do all your comparison shopping in a short period of time. Every time someone looks at your credit rating at your request, it counts as an "inquiry" and stays on your report for two years. Too many inquiries lowers your score because it looks like you are about to open lots of new lines of credit. But if you complete your comparison shopping in a 14 day period, it will count as just one inquiry.
Next: Little-Known Factor No. 5 -
Unpaid or Late Utility Bills
It used to be that utility companies only reported seriously delinquent accounts to the credit bureaus, but many are now reporting late or missed payments just like lenders do. Plus, utilities -- including your electric, gas or phone company -- are much quicker to turn late accounts over to collections agencies. If you are behind or can't pay, contact your utility and work out a plan before that happens.
Next: Little-Known Factor No. 6 -
Consolidating Your Debt
Onto a Low Rate CardIf you are carrying balances on several cards, you might be tempted to transfer them to a low interest rate card. You save money, you lower your interest rate ... and you sucker punch your credit score! The percentage of available credit used is a key factor in your score (how much you owe accounts for 30% of your score). By consolidating, you slash the amount of available credit and jack up the percentage of your credit used in one move. Keep your balances to no more than 25-30% of your credit limit.
Next: Little-Known Factor No. 7 -
Closing Old Credit Card Accounts You Don't Use
You might think that closing lines of credit you aren't using sounds smart, but not so fast! The length of your credit history counts for 15% of your score, so closing older accounts is actually a negative. Plus remember how the percentage of credit used counts against you? Well, closing old accounts with no balances can increase the percentage of available balance you are using -- another no-no.
Next: Little-Known Factor No. 8 -
Bankruptcy & Foreclosure
It won't come as any surprise that these are the "big kahunas" when it comes to killing your credit score. But what may surprise you is how long they will continue to hurt your score. Bankruptcy stays on your record for 10 years and can easily drop your score 200 points. That means if you are lucky enough to even be able to get a loan, you will pay sky-high interest rates for the privilege.
Next: One That Doesn't Hurt -
One That Doesn't Hurt
The Dolans have one last big surprise ... an item that won't hurt your credit: credit counseling. If you are in over your head and want to see a credit counselor for help, it won't negatively impact your credit score one bit.
· Full Article: All on One Page
· For More Credit Tips: Dolans.com
More on AOL: Credit Card Tricks -
Jamie Koslow, AOL
Dirty Credit Card Tricks
Now that you've learned the little-known things affecting your credit score, Ken & Daria Dolan share how credit card companies are downright ingenious when it comes to cooking up sneaky new credit card fees and dirty tricks to take more money from you.
Click through our next gallery as the Dolans reveal seven of these tricks to look out for and, of course, avoid.
· Gallery: 7 Games Companies Play
Next: More on AOL -
AOL Editor's Pick:
How Credit Savvy Are You?
Can checking your own credit report hurt your credit score? Well, if you want the answer, you'll have to take our 8-question credit quiz! See how credit savvy you are.
Take Quick Credit QuizMore in Money & Finance
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Ken & Darian Dolan
The Dolans use their vast expertise on all money matters to answer personal finance questions, ranging from taxes to saving for college.
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- Credit Score Myths
- WalletPop.com: Ask the Dolans
Recent Comments
EdgarLongenecker 01:54:18 PM Sep 14 2008
My comments, appear on other sites, as if, one or another comment, negates the validity of another, or visa versa, as if, having sensible, opinions about whatever comes up, so as to shorten the leashes of those who'll argue with anything but the facts; somehow, impugns credibility; so, let's argue that delusion, with facts, of course... any takers, besides whiners and snivellers, with nothing to say...??? Edgrrr....
Bcrockettl 06:53:05 PM Jul 26 2008
hey pay your bills ontime and don't get credit cards....it's a pretty simple formula
Chuckels42 01:51:23 PM Jul 11 2008
If some banks have to close because they loaned out too much $, so be it. Shame on them for charging such high interest rates on credit cards. I realize that banks have to make a profit, but sometimes emergencies come up and payments are late. But to raise one's interest rate to over 30% AND charge a $39 late fee because of 1 late payment is absolutely absurd. A late fee alone should suffice, but to add insult to injury and jack up interest rates is not good business. I moved recently and it took the USPS a while to catch up to me and I was late on a credit card... not only did I get hit with the $39 late fee, but also 34% interest rate. Needless to say, when the bill came, I paid it in full and am finished with US Bank. I hope that their quest to make a "profit" was worth losing a good customer. They lost my business permanently!!!!------------------------------------------------------------So true ...they want people to pay but tack on late fees and the interest rate is absurd how th
babydoitfor 04:18:57 PM Jun 12 2008
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KitewingE 10:45:40 AM Jun 10 2008
I think the problem here is unregulated abuse by these credit companies. Court judgements hurt you even if the court is satisfied? This does not hurt an incorporated company but it hurts you!! And because of mandatory 'arbitration' you don't even have the right to review by a jury of your peers.
ExotiqueJunque 03:41:39 PM Jun 06 2008
Since Walmart is sending all our money and industry, on a slow boat to, China... and, since China, is using it to buy up all these commercial notes... why don't we just minimize the intermediary embezzlers, cutting out the twenty stages of inbetween extortions, and deal directly, with Chinese investors, to, cut our expenses and purchase costs in half??? How much would our economy benefit, with all our expenses halved, and, in sending all these commercial conspirators to their minimum wage McJobs.... so that "society," can stop hemorhaging money.... and, just think how the UNSURANCE GLIBERTY MUTUAL CROOKS will whine, when, their racketeering, comes to an end; shades of Eliot Ness; Frank Nitti, is going down.... Edgrrr... STALAG SKEW, AHNOLDS' KALI FORNIA..... at Y-RICO....
ExotiqueJunque 03:21:35 PM Jun 06 2008
By what lawful right do these monopolies, who erroneously refer to themselves as CREDIT REPORTING AGENCIES, by, disseminating "INFORMATION NOT DEEMED TO BE CORRECT," embezzle, your name, enter, misinformation, as if it doesn't matter , into their stolen identity data bank; that, information not deemed to be correct, and, without a waiver of your rights, or, a contractual agreement, wherein you get yours for what they're stealing...ie., an unconscionable, unlawful contract... these crooks, can profit in their criminality, by, forcing you, into their commercial, data bank, to, sell that embezzled misinformation to their member extortioners...also, in commerce... then, to put a lid on information not deemed to be correct, add a statement to their form sheet; "The customer, is not to see this form"... surely an unfair business practice.... Edgrrr... Stalag Skew, Ahnolds Kali Fornia...
ExotiqueJunque 03:00:13 PM Jun 06 2008
A V.A. loan guarantee, doesn't mean you can borrow money, says, a Klammath Falls, Oregon, Loan officer... so, when does eligibility, become, ineligibility; when, you're in Klammath Falls... Where The are no "Falls?"
Miss swamp thing 09:02:24 AM Jun 06 2008
If some banks have to close because they loaned out too much $, so be it. Shame on them for charging such high interest rates on credit cards. I realize that banks have to make a profit, but sometimes emergencies come up and payments are late. But to raise one's interest rate to over 30% AND charge a $39 late fee because of 1 late payment is absolutely absurd. A late fee alone should suffice, but to add insult to injury and jack up interest rates is not good business. I moved recently and it took the USPS a while to catch up to me and I was late on a credit card... not only did I get hit with the $39 late fee, but also 34% interest rate. Needless to say, when the bill came, I paid it in full and am finished with US Bank. I hope that their quest to make a "profit" was worth losing a good customer. They lost my business permanently!!!!
