Credit card firms, mortgage bankers, and car dealers are examples of lenders who will examine your credit score before choosing how much and at what interest rate to offer you.

A credit score is three-digit number lenders use to assess the risk of lending money to a borrower. Before providing an insurance policy or renting out an apartment, your lender, landlord, and insurance firm may see your credit score to assess if you are fiscally responsible and can make payments.

Here are the nine things that may hurt your credit score.

9 Things That Hurt Credit Score

1.      Cancelling Your Credit Cards with Zero Balances

Keep a credit card even after you’ve paid it off. Cancelling a credit card can harm your credit score in two ways: It lowers your overall credit limit, which may increase your credit use ratio. It can also shorten the length of your credit history.

2.      Credit Application Co-Signing

When you use your good credit to co-sign for relatives or friends with less-than-perfect credit, you accept responsibility for their debt. If they can’t pay, you will have to — or your excellent credit will suffer.

3.      Failure To Pay Your Debts Timely

If you have many pending credit card payments, you have a problem. Delayed payments on basic utilities such as phone bills, rent or loans can also adversely impact.

4.      Applying for Additional Credit

A hard credit review is conducted on your existing account whenever you apply for credit, from a loan to a retail credit card. Even if you are not accepted, each hard examination impacts your credit score.

5.      Consolidating Balances onto One Card

Although having a single card is easy, shifting your balance to one may harm your credit. Having one large amount that advances your credit limit increases your credit usage, which lowers your score.

6.      A Single Late Payment

You may have discovered the finest credit card for good credit, but your credit score will suffer if you miss even one payment by more than 30 days. Credit card companies are likely to tell credit-reporting agencies about your delay at that time, which can lower your score.

7.      Carrying Large Credit Card Amounts

When your balance approaches your credit limit, it might harm your good credit. Maintain a credit usage ratio of 30% or less of your existing credit – the lesser, the better.

8.      Missed Payments Due to Unemployment

It’s a fallacy that filing for unemployment would harm your credit; being unable to pay off your overhead will. Speaking with your creditors before missing payments is best to mitigate the consequences on your existing accounts.

9.      Inadequate Credit Diversity

Your credit score is not only based on your credit card history. A mix of credit kinds — revolving and installment — might boost your credit score.

Final Verdict

Your credit score is crucial in getting your loans approved at the best rates. Thus, it is important to know what may hurt credit score. Using a cashback website like the Great Canadian Rebates can help you save money on purchases and allow customers to maintain good credit. Contact us for more details.