10 little-known acts that sabotage your credit score

There's more to maintaining your credit score than paying your credit card bills and mortgage on time.

By MSN Money Partner May 23, 2014 12:59PM

This post comes from Allison Martin at partner site Money Talks News


Money Talks News on MSN MoneyWe've shared some great ways to boost your credit score. But what if you've worked really hard to raise that very important number, only to make a bad decision that sends it to the trenches? Or what if what you thought was a smart move for your credit comes back to bite you?


close-up of a parking meter © Ciaran Griffin, Stockbyte, Getty ImagesMaintaining stellar credit goes beyond paying your bills on time each month and keeping your balances low. Unfortunately, there are a number of little-known factors that can tank your credit score.


1. Local government debts

Behind on your property taxes? About half of U.S. counties sell property tax liens to debt collectors, says The Washington Post. Contact your local office and see if payment arrangements can be made.


2. Parking fines

Have you been ignoring the notice you received in the mail about a past-due parking citation? If the issuer gets fed up and decides to turn the account over to a collection agency, your credit will take a big hit, and the outstanding amount will soar once the interest, penalties and administrative fees are tacked on.


3. Past-due library books

If you're an avid reader, be sure to turn in those books on time or make sure to promptly pay any overdue fines or fees. Some libraries turn unpaid fines over to collection agencies.


4. Cellphone bills

Ditched your cellphone contract for a more attractive plan with another provider? Hopefully you took care of the outstanding balance and termination fee, or your credit score will take a hit.


5. Cash-only purchases

Using cash for all of your transactions is not a bad idea, especially if you are trying to avoid returning to a debt-ridden existence. However, if you are new to the credit world, it is practically impossible to boost your score without some form of debt.


I'm definitely not suggesting that you open a new credit card or use your card all the time, but unused credit card accounts can be hit with dormancy fees that could damage your credit if you don’t realize they're there.


An unused account could also be canceled, which reduces your available credit and could also be detrimental to your credit score.


6. Car rentals

Planning to rent a car using your debit card? Be prepared for the hard inquiry on your credit file that could result, plus a big deposit. The impact of a hard inquiry on your credit score varies by individual, but those newest to the credit world are usually hit the hardest because of the limited amount of information available in their credit profile.


Says Credit.com

If the credit checks and deposits are too much for you to handle, search for companies, such as Alamo, that waive these requirements for debit card holders. Or, visit your nearest Rent-A-Wreck to retrieve a cash rental car with no strings attached.

7. Over-the-limit credit card balances

Not only will you be hit with a fee, but your credit utilization ratio will skyrocket, damaging your credit score.


To potential lenders, nearing your card's limit indicates you are overextended and could have a hard time taking care of your obligations in the near future.


8. Too many credit card applications

Rate shopping for car and mortgage loans is a good thing and likely won't drop your credit score, but applying for too many new credit card accounts in a brief period of time is a red flag to lenders.


9. No diversity

Lenders are interested in knowing if you can handle both revolving and nonrevolving debt, and the mix of credit you have constitutes 10 percent of your FICO score -- the most commonly used credit score.


10. Closing credit cards

Not only could this increase your credit utilization ratio, it could also shorten the length of your credit history -- although closed accounts will remain on your credit reports for seven to 10 years.


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