Do you aspire to own a home? Unless you can afford to pay for your home in cash, maintaining a good credit score is key. There are many ways to improve your credit score from paying your bills in full and on time to not exceeding your credit limit on your credit card. There are also plenty of ways to a lower credit score. Let’s take a look at some of the lesser known ways to hurt your credit score.
Library Fines and Fees
Are you in the bad habit of always returning your library books late? Yep, you could potentially hurt your credit score. Although libraries don’t report late books to credit reporting agencies, they do if your debt is sent to a collection agency. For example, the Toronto Public Library uses a collection agency if you have unpaid fines or materials over $40 over 70 days, or unpaid fines or materials between $10 and $40 over 120 days. Not only will you lose the privilege of taking books out from the library (ouch!), your credit score could be lowered (double-ouch!).
Renting a Car Not Using Your Credit Card
Have you ever tried renting a car without a credit card? The car rental company makes you jump through hoops. You’ll have to pony up a security deposit, provide documentation to prove your identity and they might even pull a copy of your credit report. This hard inquiry is what could hurt your credit score. If you rent cars often, it could have a big impact on your credit score. Using a your credit card to rent a car just makes sense – not only do you protect your credit score, your credit card might offer you extra insurance.
Increasing Your Credit Limit
Your low credit limit may have been fine when you were in college, but now that you’re an adult in the “real world” with bills, a mortgage and a family, it may not be enough. Some credit card companies do a hard inquiry before increasing your credit limit similar to when you apply for a credit card for the first time. Credit inquiries are one of the factors that affect your credit score, so increasing your credit limit too often could have the potential to lower your credit score.
Parking Tickets
Similar to library fines, parking tickets may be sent to collection agencies if left unpaid. Even if you pay the collection agency, it will still show up on your credit report. Avoid parking tickets at all cost – if you do get one, fight it in court or pay it right away. Don’t tear it up and hope it’ll go away because chances are it won’t.
The Bottom Line
These are just four of the many lesser known ways to lower your credit score. While a few “hard inquires” generally wont do long term damage to your credit, having a bunch of collections will. Avoid committing these credit faux pas and focus on doing things that boost your credit score instead. The last thing you want is a knock against your credit score that follows you around for the years to come.
