Learn 4 Surprising Things That Damage Your Credit

• The magic number seems to be 30%. Avoid using more than 30% of your available credit and you’ll be in great shape. That’s why the 100% utilization in the previous tip is detrimental.
• Your credit utilization is also why closing accounts can damage your credit score. The less credit you have available to you, the higher your utilization ratio will be whenever you do use your credit. Consider that fact when you think about closing accounts. Keeping them open raises the amount of your available credit.

3. Hard inquiries. In the world of credit, there are hard inquiries and soft inquiries. Hard inquiries lower your score for a time, while soft inquiries don’t affect it at all.

• A hard inquiry is when a potential creditor looks at your credit report to determine if it will extend credit to you. It shows that you’re looking for more credit. Opening a new checking account and renting a car with a debit card can also result in hard credit checks.
• A soft inquiry occurs when you look at your credit report. No harm, no foul. It’s also a soft inquiry when a current creditor takes a peak at your report to ensure that your credit is still in good shape since the last time they looked.

4. Not using any credit. Perhaps you feel that you’re being financially intelligent if you swear off credit altogether. However, even if you keep your credit cards, if you never use them at all, you’re hurting your credit score. You need to have some sort of payment history.

• Use your credit cards once in a while. Buy a tank of gas or dinner and then pay it off at the end of the month.

Your credit is worth keeping in mind. So many things are more expensive when your credit is poor. In fact, many things are entirely out of reach if you have a low credit score. Remember the surprising things in this article that can damage your credit and make an effort to avoid doing any of them. Your financial future depends on it!