We often get told exactly what we need to do to build up our good credit, but there are also small things we’re doing that we might be causing our bad credit and not even know it.
And while many of us assume it’s simply a matter of stopping our overspending and paying off our balance in full every month that will save us, there are also several surprising ways we’re causing ourselves to have a low credit rating, not even knowing it until now.
Society is becoming increasingly dependent on credit to make purchases and financial decisions. A good credit score is used for more than just getting a credit card or a loan. Credit scores demonstrate your history of paying your debts to entities that loan you money.
Here Are 5 Unexpected Things Ruining Your Credit
5. Paying off your credit card too quickly
Many things can ruin your credit score, even if you’re doing everything right. Paying off your credit card too quickly is one of them.
Paying off your credit card balance in full every month is the best way to maintain a good credit score. But if you do it too quickly, you could hurt your credit score instead. That’s because your “credit utilization ratio” is one of the factors that lenders look at when determining your credit score. This ratio is calculated by dividing your credit card balance by your total available credit limit.
If you pay off your balance in full every month but have a low credit limit, your ratio will be high, ding your credit score. So it’s essential to find the right balance between paying off your debt and keeping your utilization ratio low.
4. Closing old accounts
Closing old accounts can unexpectedly ruin your credit. Closing a statement that you have had for a long time can lower your credit score and increase the amount of debt you owe. It is important to keep old accounts open because they help establish a long credit history, which is beneficial for long-term credit history.
When you are applying for a loan or mortgage. Additionally, closing an account can also increase the cost of your debt because you will now have less available credit. Be sure to speak with a financial advisor before closing any accounts to ensure that it is the right decision for your unique situation.
3. Missing even one payment
Missing one payment can ruin your credit. It can be an unexpected thing that ruins your credit score and makes it difficult to borrow money in the future. If you’re struggling to make your payments, contact your lender as soon as possible. You may be able to work out a payment plan that will help you avoid missing any more fees.
2. Renting a car
When you’re renting a car, you’re taking on a lot of responsibility. You’re trusting the rental company to give you a vehicle in good condition, and you’re trusting yourself not to damage the car. But, unfortunately, things can go wrong even when you’re trying your best.
Here are three unexpected things that can ruin your credit when renting a car.
1. Returning the car late
If you return the car late, you’ll likely be charged for an extra day or two of rental. This can add up quickly, and if it’s not paid off right away, it can cause your credit score to drop.
2. Getting into an accident
Even if the accident is minor, it can still cause your credit score to drop if it’s not paid off right away.
1. Cancelling zero-balance credit cards
Congratulations, you’ve paid off your credit card congratulations!, If you have a zero balance credit card, it’s essential to cancel it as soon as possible. This is because having a zero-balance credit card can hurt your credit score.
Here’s why: when you have a zero-balance credit card, it looks like you’re not using your credit at all. This isn’t good for your credit score because you’re not using your credit responsibly. To maintain a good credit score, you need to use your credit responsibly. This means using less than 30% of your available credit and having a mix of different types of accounts.
So if you have a zero balance credit card, be sure to cancel it as soon as possible. It may not seem like a big deal, but it can ruin your credit score.