These Unthinking Actions Can Kill Your Credit Score


Most people are diligent about protecting their credit score from the most common actions that are known for lowering a credit score, such as making payments late or maxing out their credit cards. They are less diligent about some of the lesser known ways to damage their credit score and are often surprised to find that their credit is less than perfect when they feel as if they have been doing everything right. Some of these actions insidiously drain your credit score a few points at a time while others cause a dramatic drop quickly. Here are some unthinking actions to avoid if you want to keep your credit score high and your interest rates low.

Lots Of Credit Inquiries

Many people do not realize that filling out a lot of credit applications and having many companies performing credit checks on them is actually lowering their credit score. When an inquiry is made in the pursuit of obtaining additional credit, often called a hard inquiry, several points are deducted from your credit score. When a lot of inquiries are made all at once, it could cause a significant drop in your credit score right when you need it the most. It is important to apply for credit sparingly and only when necessary, not at every checkout counter where a salesperson is paid to ask you to sign up for a store credit card.

Paying Less Than The Minimum Payment

Paying less than the minimum payment required for your credit card is another way to harm your credit score more than you might think. While you may think that it is better to get credit for paying something towards your balance, making a payment that is less than the minimum is treated the same as missing a payment completely. The minimum payment amount for a credit card is generally the amount of interest charged for the period plus 1 percent to 2 percent of the balance. Paying less than the minimum means that the credit card company is not getting all of the interest it was promised in the contract and will result in a drop in the offender’s credit score. Always make sure to pay at least the minimum amount due and if you are having trouble making the payments, contact the lender and see if you can work out some type of payment plan before you default on the account.

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