Top 7 unexpected mistakes that spoil your credit score

Seemingly small, a mistake can lead to a sharp drop in your credit rating. Edition Money Talks News has compiled a list of small mistakes that affect the credit rating, although many do not even know about their relationship.

1. Car rent

Planning to rent a car? If you are using a debit card for booking, the car rental company may require a credit check. This can affect your credit score.

Here's the best option: Confirm your booking with your credit card to avoid unnecessary credit requests. Then pay the final invoice with your debit card when you return the car.

2. Closing a credit card

Closing a credit card account sounds smart. But it can actually lower your credit score. Closing an account affects the so-called loan utilization rate. This is the fraction of the credit available to you that you use.

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This ratio affects both the FICO credit scores and the VantageScore credit score. The lower your ratio, that is, the less of the credit funds available to you you use, the better your credit rating will be. However, closing the account of a credit card that you are not using decreases the amount of credit available to you. This in turn increases your loan utilization rate, which negatively affects your credit rating.

3. Late rent

If your rent is not paid on time, the landlord can report your delay to the credit bureaus. If you are having problems with rent, offer the landlord a payment plan. In this way, you can save your good name and reputation.

4. Default on recurring bills

If you are even slightly behind on your utility bill, cell phone company, or other recurring service provider, chances are you will receive several notifications before services are terminated.

But as soon as the supplier gets impatient, expect them to pass on the information to the debt collectors. Accordingly, three major nationwide credit companies - Equifax, Experian and TransUnion - will learn about it. Don't ignore correspondence or neglect commitments.

5. Violation of the contract to visit the gym

Even if you're tired of wasting your hard-earned money every month on a gym membership you don't use, don't just walk away.

Close your account correctly or it could cost you early termination penalties. This will ruin your credit score.

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6. Unpaid medical bills

If you're having trouble paying your medical bills, try to address the issue as soon as possible. For example, ask for a payment plan.

Ignoring collectors by disabling the ringing on your phone or sending their calls to voicemail can ultimately lead to “flaws” in your credit report.

According to the changes in the credit industry announced several years ago, medical debts are reflected in the credit rating only after a 180-day waiting period. This period allows you to make insurance payments. In general, credit history agencies give little value to outstanding medical debt. However, paying your medical bills on time can help you avoid credit rating problems.

7. Too many credit card applications

Ten percent of your FICO credit score depends on how you shop on credit. Diversified loans are good for the rating. However, opening several new credit accounts in a short period of time presents a greater risk. This is especially dangerous for people who do not have a long credit history. Keep this in mind the next time you are offered a store credit card, getting one may lower your credit score.