Do you ever forget things? Like the one item you went to the grocery store for, only to come out with a cart full of items and you forgot the one item? Or other things like paying your bills on time. We all know that not paying your bills on time will hurt your score, but there are other ways that you can do that will hurt your score.
- Late Rent Payments – Your rent payment is normally due on the 1st of the month, and your landlord may have a grace period of a couple of days. You may think, “The landlord wouldn’t care if I am a couple of days over the grace period”, but that is not necessarily true. Did you know your landlord can pay to report your payment history to the credit bureaus? Yes, some landlords will take this route if you are late on your payments. So to avoid a negative score, pay your rent on time.
- Ignoring Fines – You may have a fine for returning or losing a library book, or you were 2 minutes late on the meter and gotten a parking ticket. You might not have the money or refuse to pay the fine, but did you know that those fines can add up and be reported to the credit bureaus? Your fines can be tallied up and sent to a collection agency. From there, the collections agency can report your outstanding amounts to the credit bureaus. So don’t make your problems worse by not paying your fines off in a timely manner. They are able to haunt you for a long time.
- Medical Bills – Unpaid medical debt is the number one reason why Americans today file for bankruptcy. To add insult to injury, if your medical debt is large and you have to file for bankruptcy, that damage can take a toll on your credit score for a good decade.
- Applying for credit – Your credit report gets pulled whenever you apply for any line of credit. However, if you have a large number of inquiries over an extended period of time, it shows the lender you are desperate for credit. However, inquiries within a 14-day period will appear as one inquiry. If you want to compare options by pulling your credit score, do them within a 14 day period to limit the damage on your credit score.
- Financing – With the holidays approaching, advertisements might to sell you to finance your brand new 4K TV with 0% interest rate or you can finance Jimmy’s new video game system with 0% APR for the next 2 years. Now, as tempting as this offer sounds to all of us, it might not be the best option for you. Why? Financing a purchase will open up a line of credit for that exact amount. When you make your monthly payments, you will increase your debt utilization ratio. Anytime you finance, the loan is looked at to the credit bureau as a “loan of last resort”. Oh… and “Loan of last resort” is our next and final topic!
- “Loan of last resort” – Let’s face it, life happens. Your car could break down randomly and it requires a costly repair, or you have a home repair that requires a chunk of change. If life little mishaps just happen to fall on your lap, you are able to take a payday loan to help pay for the repairs and such. However, these types of loans with store financing are frowned upon by other lenders and it could impact your score.
So, as you can see, simple small mishaps or “forgetfulness” can hurt your credit score. For questions on how much it could hurt your score or how it could hurt your eligibility to buy your home, visit us at mortgages for champions.