Carrying a heavy credit card debt load can be stressful enough with a good credit score, but if you end up damaging your score while paying down your balances, your APR could rise and make it more expensive.
Most of you likely know about the common ways you can damage your score – i.e. paying late, going over your credit limit – but there are other, less conventional ways your credit can take a hit that you should be aware of.
1. Closing your credit card – After you pay off a balance or consolidate debt through a balance transfer, closing your card that has been costing you a lot of money might seem like a good move. However, doing this could actually damage your credit score. With that said, you might want to consider stashing this card away instead, and using it sparingly to ensure it continues to report positive information to credit bureaus.
2. Ignoring past due fines at libraries – If you are one of the people who hasn't made the move to e-books and still uses the local library, be sure you return your books on-time. If you fail to give your books back, libraries will likely charge you a fee, and if you don't pay that fee, your credit score can actually take a hit. After a certain period of time, this debt will be sent to a collection agency, and put a negative mark on your credit report.
3. Unpaid parking tickets – Nearly everyone gets a parking ticket in their lives, and if you do, it is important to pay it on time. Much like an unpaid library fee, failing to pay your parking ticket in a timely manner can lead to a town sending the fee to a debt collection agency. As soon as it reaches one of these institutions, your credit score will be negatively impacted.
4. Renting a car with a debit card
To avoid racking up credit card debt, you might choose to use your debit card to rent a car while on vacation. However, this could be a bad move, as rental car companies can pull your credit report if you choose to use a debit card over a credit card. This adds an inquiry to your report, which can hurt your score.