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What Really Harms Your Credit?

Published July 12, 2019 

By Jordan Ottaway

We’ve talked a lot about credit on the blog. From credit repair scams to how you can take steps to fix your credit score on your own. This one is going to be a little different. Did you know that there are ways you could be hurting your credit and not even know it?

Here are a few things that you might be doing that could bring your credit score down. 

Closing old or unused credit cards 

This might seem weird, but if you’ve paid off a credit card, hold onto it. Canceling that card can hurt your score in two ways: It reduces your total credit amount, which can raise your credit utilization ratio. It can also shorten the age of your credit history since 15% of your score is dedicated to the length of your credit’s history. 

Closing older credit cards, especially ones that you’ve had for many years makes your credit history seem shorter. Even if you don't actively use the card, if there's no annual fee, keep the card open because you have nothing to lose.

Having only one type of credit

A mix of different types of credit is 10 percent of your overall score. When you have only one type of credit account, either loans or credit cards, your credit score could be affected. Usually, this comes into play when you have very little additional credit information in your credit history. When looking to raise your credit score consider the types of credit you have. Is there a diversity of credit, for example auto loans, personal loans, lines of credit or credit cards, or is it mostly one type of credit? 

Co-signing credit applications 

Whenever you co-sign with your good credit to help family or friends with less-than-perfect credit, you take on the responsibility of their debt.  If they can’t pay, you’ll have to — or your good credit will suffer the consequences.

Sometimes this situation can’t be avoided, but it’s always good to know what you’re getting into as a co-signer when you help someone secure a loan. 

Ignoring your credit report 

Don’t ignore your credit report. You can get free credit report every year from annualcreditreport.com. Use that access to monitor for potential errors that could end up hurting your credit score. If you see something that doesn’t look right or add up, especially if it’s something you didn’t do, work to get it fixed so your credit score doesn’t suffer at the hands of someone else’s actions. 

Conclusion 

Since your credit score is important to you and your financial health, it’s a good idea to keep an eye on your credit to make sure you’re in good standing and aren’t unintentionally bringing your score down.
Headshot of Jordan Ottaway
Jordan Ottaway contributed to the Neighborhood Credit Union blog from 2016 - 2019.