1. Closing a credit card account
The act of closing a credit card account will not hurt your score in itself . What it can do, however, is to reduce your credit utilization rate, which determines about 30 percent of your FICO score, according to FICO. Say for example, you have two credit cards, both of which have a credit limit of $ 5,000, giving you $ 10,000 of the total credit. If you owe $ 2500, your credit utilization rate - which determines how much credit you are currently using - would be 25 percent, a figure healthy. However, if you closed one of your accounts, your credit utilization could take up to 50 percent, which negatively affects your credit score.
If you decide to close an account, make sure that your rate remains below 30 percent once the account is closed.
2. Application For New Credit
When you apply for a new credit line, whether for a credit card or a car loan, the issuer credit will run a hard inquiry into your credit report. Having too hard on your requests at one time credit report can lead to a drop in your score, and can also seriously affect if you apply for multiple credit lines in a short time. It is best to apply only for credit when you need them.
Also, use only the cards you know you can qualify for. If you are denied for five cards before being approved, it is difficult six inquiries on your credit report, which will lower your score. Check out this list of the best credit cards for each credit score to get a better idea of what credit cards are best for you.
3. Renting a car with a debit card
This is all assuming the car rental service allows you to rent with a card flow. Some do not. At first glance, this may seem strange since you do not pay with credit. However, some agencies will check your credit report if you decide to pay by debit card. The rental agency can see it as a red flag that you use a credit card, so they'll check and see if you can trust. It will count as a difficult investigation and could cost some points on your score.
4. Fund a major purchase
If a furniture store or electronics offers to allow you to finance a major purchase, such as a sofa or a flat-screen TV, think twice about it. Some store financing can be considered a "loan of last resort", which can make you look like a credit risk. Any funding will also result in a hard inquiry on your credit report.
If you want to make a major purchase, but do not want to pay for everything at once, remember to put it on a new credit card instead of getting a store financing. Many credit cards now offer 0% Intro APR for up to 18 months, meaning that you will not pay interest on the purchase of a year and a half. It will also increase your credit utilization rate, since you take the most credit. These cards now offer 0% Intro APR for 18 months deal.
5. Do not pay a parking ticket
You might think you've pulled a fast one on the local municipality by not paying a parking ticket, but they could have the last word. Some cities, including New York and Chicago, send your unpaid bills to collection agencies. Your credit score may take a severe beating if you have an account in collections.
So while you might think you saved $ 65 on a parking ticket, you may have to pay hundreds of dollars more on a new loan. This is because you can not obtain favorable terms on the said loan due to the decline in your credit score for not paying the parking ticket.
This is the same for electricity bills, back rent and other expenses that you forgot to pay. Make sure all your accounts are paid so that no one can send your account to a collection agency.
This post originally appeared on The Huffington Post.