Your credit score is something that a lot of people take for granted. You’ve been pretty careful with your money, you’ve never missed any significant payments and you’ve not ever been seriously in arrears on anything, so you assume that all is well with your credit rating. Well, the truth is that there are many ways that you can negatively affect your credit score and some of them may come as a bit of a shock to you. Did you know, for example, that just making an enquiry about taking out a loan could damage your credit score? Here are ten of the shocking things that could mean that you will have to pay more the next time you take out credit, or possibly even be refused credit.
1. Not paying a library fine
Remember that book you borrowed from the local library and never took back? Well, libraries are not averse to passing unpaid fines over to debt collectors to recover and unpaid fine and that will have been recorded on your credit history. That £2 fine that you thought was so unimportant could cost you dearly the next time you apply for credit.
2. Having a business credit card
Your company may well be responsible for paying all the travel expenses you wrack up on your business credit card, but if they don’t pay their bills on time, that could have an impact on your personal credit score. If you check the small print on the company card agreement that you signed, you will probably find that are jointly responsible, with your company, for payment of the bills.
3. Paying for a car rental with your debit card
Anyone who does what is known as a hard credit check on will cause your credit rating to drop a few points. If you pay the deposit in a rental car with a debit card, then the hire company is quite likely to a hard credit check on to make sure that you are good for the money, so say goodbye to a couple of credit points for two years.
4. Paying the gas and electric late
The utility companies are pretty quick to log late payments with the credit reference agencies too, so be especially careful when you move home that you pay up all the gas and electric bills. Whilst most people don’t think of utility bills as being credit, it is, and persistent late payers will be damaging their credit score.
5. Not using your credit card often enough
Your credit score goes up when you demonstrate that you use your available credit wisely and manage it responsibly. That means that not using your credit card often enough could actually damage your credit rating. That’s not to say that keeping a balance on your card is a good idea. It’s best to use it, up to about 30% of your limit, and repay it every month.
6. Not paying a parking ticket, or the London Congestion charge
Parking tickets are something that most people begrudge paying and will sit on until the last minute, but this too could be affect your ability to borrow money in the future. Local councils and Transport for London don’t hang about when it comes to passing unpaid fines to credit collection agencies and that will knock a few points off your credit score.
7. Pay nothing for twelve months finance deals
Those great deals where you get a new three piece suite and pay nothing for a year aren’t so good for your credit rating either. Let’s say you refurnish your lounge for £1,000 on a zero %, pay nothing for twelve months deal. On your credit history, that’s a £1,000 pound, completely maxed out credit line, that you will have for twelve months and that will do your credit utilization score no good at all.
8. Paying a debt off early
When you pay off a creditor early, you will save some money on interest, but that can look bad on your credit history, because it can look like you paid less than you owed.
9. Disputing a credit card statement
If you are the victim of a credit card fraud, then even though you inform the credit card company straight away, it could still adversely affect your credit rating. Even a disputed item may be included in your debt by the credit referencing agencies and that will affect your credit utilisation ratio.
10. Shopping around for credit
Anything that you do that triggers a credit check will reduce your credit score for two years. That includes opening bank accounts, swapping mobile phone providers, or requesting increases in limits on credit cards. It can also include inquiring about a loan online, so make sure that it clearly states on the website that your credit score will not be affected by your making an enquiry.
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