Missing a payment or overwhelming your credit card with charges are obvious ways to hurt your credit score, but there are some surprising credit score factors as well. Whether you’re looking to improve your credit or are trying to safeguard yourself from credit debt, keeping these factors in mind will keep your financial profile safe.
Unexpected Credit Score Factors
Avoiding these purchases or actions could help protect your credit score in the long run. Since every financial situation is different, not every factor may carry the same weight, but these are general truths that borrowers should keep in mind. To safeguard your credit score, avoid:
1. Applying for a department store card. Keep in mind that department stores have higher interest rates than most borrowers. Furthermore, when you apply for a department store card, a hard inquiry is made. In short, you could lose anywhere from 5 to 35 points on your credit score by simply applying for a department store credit card.
2. Renting a car with a debit card. Many people are tempted to pay with cash or what they have readily available. Paying with a debit card for a major item such as a rental car will certainly ignite a hard inquiry, which will drop your score by a few points.
3. Closing a card with zero balance. You’ve paid off your credit card! Congrats! But wait – it’s not time to close the card just yet. Closing a card with zero balance could offset your credit to available balance ratio, which is a large factor in your credit score. Only close a card when you have little or no outstanding debt. Also keep in mind that older cards can be used as part of your credit history to prove that you were a good borrower.