6 mistakes that can wreck your credit score


KNOXVILLE (WATE) – The next time you check your FICO credit score, you might discover it’s taken a tumble because of a seemingly small mishap on your part. Any small stumble, like forgetting to return library books, can cause your credit score to drop. A low score can affect your interest rates when you borrow money.

If you’re planning to rent a car and use a debit card to make the reservation, the rental car company might require a credit screening. What that can do is damage your credit score. Here’s a better option. Confirm the reservation with your credit card to avoid the unnecessary credit inquiry.

If you fail to pay your rent on time, the landlord could report your delinquency to each of the three credit bureaus. That could really damage your FICO score. If you’re having trouble with rent, meet with the landlord and propose an alternative payment plan until you’re caught up. That way, you can salvage your good name and credit rating.

If you’re having trouble paying medical bills, there are some steps you can take to ease the financial burden. Whatever you decide, make sure you promptly tend to the matter. Ignoring phone calls from the doctor’s office, or sending calls from collectors to voice mail will eventually result in a blemish in the form of a collection account on your credit report. Those marks stick around for at least seven years.

Did the IRS or the local tax collector send you a hefty bill for unpaid taxes? You can run, but you can’t hide. They will eventually track you down and demand what they’re owed. If you fail to respond and work something out, expect your credit score to take a dive

If you are slightly past due on a bill from your cell phone company, utility company or other provider of recurring services, chances are you’ll receive several notices before your services are terminated. If you don’t notify your provider of your circumstances, but just ignore the bills once the provider has had enough, expect to be turned over to collections and subsequently reported to the three credit bureaus. Many providers try to settle outstanding obligations, but you have to go to them to work out the details.

When you pay off the debts on a credit card, don’t be ready to close the account. Closing a credit card account may sound smart, but it can hurt your credit score. Losing a portion of your available credit increases your credit utilization ratio, CUR. which accounts for 30 percent of your credit score. An increase in this ratio has a negative effect on your score.

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