Small Things That Make a Big (Negative) Impact on Your Credit Rating

Sometimes it feels like you need a crystal ball to figure out what’s going on with your credit report. Bad debt, good debt--it can be pretty confusing even if you know a thing or two about finance. And it’s not just the big transactions like taking out a mortgage or getting a car loan that affect your credit rating. Sometimes it’s the small things that have a big negative impact on your score.

Forgetting to return 50 Shades of Gray to the library.
You may think that library fines aren’t a big deal but the government doesn’t. The library is municipal organization and those debts go right on your credit report when they reach the collections stage. The same goes for parking tickets, fines, and other money owed to your city. Not moving your car on street cleaning day and forgetting to pay the ticket you got for it can bring down your credit rating.

Not settling up before you changed cable companies.
Moving is stressful enough but sometimes that also means you have to change service providers. And the stress can double when you realize that your old utility company has placed a debt on your credit report. That’s because while utility companies don’t report your monthly payments to the credit bureaus, they will report any debt they have to move to collections.

Getting approved for too many credit cards at once.
So you got a new credit card. You may think that’s something good for your credit rating because that would mean you’ve increased your credit to debt ratio. But if you opened too many credit accounts at once, it can be a negative on your credit report. Each time you open a credit account, it cause a hard hit on your credit rating. So five new credit cards can actually hurt your credit, not improve it. 

Not having health insurance.
People without health insurance still get sick. With the rising costs of health care, uninsured sick people usually wait until the problem has gotten so bad that they need a trip to the emergency room. After the ER doctor fixes you up, the hospital hits you with the bill. You may ignore those red envelopes the hospital sends to your house, but it’s your credit that will suffer. Unpaid medical bills show up as negative debt on your report.

Shopping around for a new cell phone plan.
With mobile phone costing between $300 and $600 dollars these days, cell phone companies are enticing consumers with the offers of free phones or subsidized phones. They are also taking deposits for opening accounts because of the increased costs of the phones and plans. But, no worries, if you have a decent credit rating, you can open a new account with no deposit. Now, if you’re shopping around for a new cell phone provider, you may be checking rates all over town. Four or five hard hits on your credit rating has the same effect as if you open four or five new accounts.

Finally closing that old Discover card you opened in college.
Yay for you if you made it through college without racking up credit card debt. It’s a difficult feat if you fall prey to those credit card companies offering free t-shirts and MP3 players if you fill out a credit card application. But as you get older and get better rates, you may consider closing those old credit card accounts. Just remember that when you close an old credit account, it changes your debt to credit ratio and can potentially hurt your credit score.