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4 moves that can lower your credit scores

You may be damaging your scores without knowing it.

By MSN Money Partner Aug 31, 2011 5:32PM

This post comes from Lisa Gerstner at partner site Kiplinger.


Most people know that paying bills late can play havoc with your credit scores. But not every move that shaves points from your credit scores is so obvious.


Charging a big balance to a store card. You're tempted to buy thousands of dollars' worth of furniture or appliances and charge it all to a store credit card that doesn't require payments for six months or even a year -- and sometimes longer. But debt that sits untouched could drag down your scores, especially if the balance is near the card's limit, says John Ulzheimer, president of consumer education at (Estimate your credit score for free.)


That's because your credit-utilization ratio -- the amount of debt you have relative to your credit limits -- is calculated for balances on individual cards as well as overall. In addition, store cards tend to charge steep rates, so if you don't pay the balance before the interest-free period is over, you will rack up big charges.


Trashing a parking ticket. Parking and speeding tickets, library fines, and other dues to the government left unpaid won't go directly to your credit reports. But if they are eventually reported to a collection agency, they could damage your scores. That goes for anything that could go to collections, such as unpaid rent and medical bills. And even if you pay up, collections will appear on your reports for seven years.


Stuffing your wallet with cards. If you've had a handful of cards for years, they won't hurt your scores. But if you open several new accounts in a short period, your scores are likely to take a hit, and you may not benefit immediately from expanded credit limits.


Transferring a balance to a new card. The inquiry on your report from the new lender may shave a few points from your score, but the real problem is what you do with the old account. If you close it, your overall credit limit could go down, and your credit-utilization ratio will increase if you have debt on any remaining cards. Your best bet: Leave the old account open but keep a zero balance.


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