Ways You're Ruining Your Credit Score

Just because you’re disputing one item doesn’t mean you’re suddenly off the hook for paying the rest of your bill on time. A late payment is a late payment as far as your credit score is concerned. “Lose the short-term battle, but win the long-term war,” 

 Co-signing: When you co-sign a loan for a relative or friend, you open yourself up to blow-back from any bad activity that happens down the road.

“It’s like saying, ‘A bank won’t touch you by yourself, but for some reason I trust you and I’ll put my credit reputation on the line,

The loan will show up on your credit reports, almost as if it’s yours, and any missteps like late or missed payments will negatively impact your credit score. While it could make for an awkward conversation at the dinner table, you have to consider the worst case scenario before signing on the dotted line. Imagine if your son suddenly can’t make payments, and you’re faced with making them yourself or accepting the hit to your credit score.

 Taking on too much credit at once: You shouldn’t be opening a lot of accounts in rapid succession, especially if you’re younger and don’t have a long credit history. “It’s a red flag that something is going on, because it indicates to a lender that you might be in financial trouble and grasping for credit.

Plus, every time you apply for a new credit card or loan, a lender makes something called a “hard inquiry” to check you out. This can ding your credit score, although if it does it probably won’t be by much. Or for long. Inquiries aren’t factored into your credit score after 12 months have passed.

 Shunning credit: While it may seem counter intuitive, steering clear of credit and debt isn’t the responsible thing to do either. When it comes time to buy a house or a car, and you don’t have enough cash on hand to do so, the bank you approach for a loan will assess your risk. Do you have a squeaky clean past or skeletons in the closet? If you’re a credit hermit, you’ll have little to show either way.

Along this same line, you don’t really want to go on a simplification binge and close old accounts. About 15% of your credit score is based on the age of your accounts, and older ones help demonstrate your responsibility over a long period of time.What if you have an old credit card in your wallet gathering dust? “Use it to buy a lunch every month just to keep it active,

Plus, don’t forget that by closing a credit card or other account, your total credit limit will go down. This may suddenly give the appearance that you’re spending more, at least relative to your allowance, and inadvertently result in a lower score.