5 Things You Didn’t Know Hurt Your Credit Score

5 Things You Never Knew Hurt Your Credit Score

Good credit is important if you want to do stuff like get a loan to buy a car or a mortgage to buy a house. Since your credit score signifies your capability to pay off your loan, it’s one of the most important deciding factors among lenders whether they’ll approve your loan or not. Usually, a poor credit score may mean that you don’t have enough financial capacity to pay off your loans, which can become the reason why lenders won’t approve your car or home loan.

Some employers even check a potential hire’s credit score to see if he’s demonstrated fiscal responsibility.

A poor credit score usually means that you don’t know how to properly handle your finances–a problem that can affect your working habits and, eventually, your productivity in the company. Employers will always choose to hire an employee with a good credit score because this shows that an employee is able to effectively manage their finances. 

And while (we hope) you know that welching on credit card payments or maxing out your cards are surefire ways to nosedive your credit score, there are also things you probably never would have thought could affect your score, such as:

#1: Signing Up For In-Store Credit Cards
You really shouldn’t make a habit of signing up for a store’s credit card so you can save 15 percent on chinos. That’s because each time the cashier runs your application for approval, he or she creates an inquiry on your credit report that stays there for two years. Do this enough and credit monitoring companies will declare you irresponsible and drop your score so you’ll be charged higher interest rates when applying for a car loan or a mortgage. Plus, in-store cards tend to have higher interest rates. Besides, those pants make your hips look big.

Signing up for in-store credit cards is convenient and allows you to score discounts on your purchase. But if you want to improve your credit score, you should look at the bigger picture. Applying for these credit cards can significantly hurt your credit score for years, making it hard for you to make important purchases in the future.

#2: Canceling Credit Cards With A Zero Balance
If you’re not being charged a fee to keep a card open, just let it be. It’s better to show that you have a paid-off account and no history of delinquency than to have no accounts open at all. Plus, if the card is left inactive long enough, the credit card companies will view your account as a liability instead of an asset since you’re not giving them any money. And then they’ll close them for you.