Having good credit scores is very important. Being ignorant on how you could ruin your credit rating is very dangerous especially since people have grown reliant on credit nowadays. Your credit score is so fragile that most of the time, people can unknowingly do something that although may seem right, may also negatively affect how they stand with their credit.
The key to avoiding this is to understand how agencies like TransUnion, Equifax and Experian determine your credit score. You see, these agencies have different formulas in arriving at a score for your credit rating, however they are not much different and they actually have similar considerations with how your FICO score is determined. Here are 5 easy ways to trash your credit score, which you might want to avoid.
Late Payments
Being late on your payments definitely affects your credit score. Since the purpose of these credit ratings and scores are to see whether you have the ability to pay, not being able to pay your bills on time, regardless of the amount, would have an impact on your credit.
Using Too Much Credit
Experts say that using too much credit also negatively impacts your FICO score. Regardless if you pay off that balance right away, the system generally recognizes those high credit balances just the same. Since the system does not discriminate on these aspects of credit usage, it is best to spread out your spending over several cards.
Closing Card Accounts
Since a part of your credit card rating is the ratio of your available credit to the credit being used, closing credit card accounts would mean that you have decreased your available balance.
Not Using Your Credit Card
In the case of inactive credit card accounts, credit card companies could end up not reporting it as part of your available credit to the agencies since you are not using it anyway. They would assume that you are only boosting your credit rating with that account.
Parking Tickets
This refers to fines not related to credit cards but actually fines such as parking fees and even library fees. Regardless of the amount, these fines are reported as money owed; left unpaid, these can definitely harm your credit rating.
