What do overdue library books, unpaid parking tickets and the U.S. Postal Service have in common?
If you’re not careful, all could potentially hurt your credit score. Since your credit score is used by banks, credit card companies and even employers, anything that could ding you and drop the credit score number is a bad thing.
Here’s some things, in no particular order, that can put a crimp on your credit score:
1. Overdue library books. Do you have a book that you meant to return and haven’t for some reason? Think that 25-cent a day fee is too small to worry about? Think again. In this era of tight budgets and cuts in public funding, libraries are increasingly turning over their overdue accounts to collection agencies which treat them like debt to be collected and reported to the credit bureaus.
2. Unpaid parking or speeding tickets. These and other citations, such as littering, are considered debt and governments also send those unpaid fines to collection agencies.
3. Not forwarding mail after a move. Forget to fill out the form with the U.S. Postal Service to forward mail to a new address and you could miss notifications from your credit card companies and other lenders. If you miss a payment because the monthly statement was late reaching you at your new address, know that some credit card companies report accounts with as little as 30 days late on them, according to U.S. News & World Report.
4. Closing unused credit cards. This one may seem like a good idea on the surface, but closing out a card could hurt your overall credit score. That credit card and its spending limit is factored into the mathematical formula used to determine the credit score. Since the total of available credit you have and the total of debit are both included in that formula, cutting the available credit amount and potentially dropping your overall credit score.
5. Settling debt. If you have an overwhelming amount of debt and you negotiate with your creditors to pay a portion of it back, the amount that isn’t paid off is considered a charge-off and gets reported on your credit report.
6. Checking your credit history too often. Too many inquiries into your credit history will start having the credit bureaus take notice of the activity, said SmartMoney.com. Your credit score can dip if you’ve been actively seeking to open more lines of credit.
Maintaining a good credit score ensures that you have access — if you need it — to lower interest rates and lenders who are more willing to do business with you. It pays to keep a vigilant watch over your finances and not miss items like an overdue library book.