Your credit report and credit score can impact your buying power and borrowing opportunities. For those who are preparing to make larger purchases (like homes or motor vehicles), improving their credit or maintaining good credit can be essential to qualifying for a loan (or qualifying for optimal rates). For others, working on having better credit may be part of a bigger effort to overhaul their finances and improve their overall financial situation.
Regardless of why you may be focusing on your credit, knowing what actions can impact your credit score will be important to making your efforts worthwhile – and to not inadvertently sabotaging yourself. To this end, below, we have pointed out a handful of things that you may not realize can damage credit.
Your Credit Can Be Negatively Affected by…
- Not having or using credit cards – This can be a mistake that is easy to make when debt may be an issue and people are trying to manage their finances by cutting up/not using their credit cards. This, however, can have negative credit impacts because credit has to be used in order to establish a good credit history.Takeaway – If you are trying to manage your credit, try to limit yourself to using only one or two cards. This can help you reign in your charging while continuing to establish a history of good credit.
- Carrying a balance month to month – Even carrying a small balance on your credit cards from month to month can ding your credit. What’s more is that it will also cause you to be paying interest, which means that you’ll be spending more money to resolve your charged debt.Takeaway – Consider limiting your charges to only certain purchases so you are able to fully pay off the charged debt each month. For instance, it can be helpful to only charge your fuel or grocery purchases.
- Shopping around for larger purchases – For larger purchases like vehicles or homes, retailers tend to run hard inquiries on people’s credit. And it only takes a few hard inquiries to start decreasing a credit score.Takeaway – Ask about hard inquiries if you are shopping around for larger items. Although the impacts of these inquiries can go away within months, consider putting off your comparison shopping if you really need to maintain optimal credit.
- Taking out a retailer credit card or a “no interest” loan – Although retailer credit cards and no-interest loans can seem very appealing on the surface, both can come with some negative credit impacts, especially if you are carrying a balance on the credit card, you are not able to pay the loan off before the interest kicks in, etc.Takeaway – Avoid taking out any new lines of credit or loans when you are focused on improving your credit. More credit lines and loans can mean more debt payments to manage, and this can increase the risk of missing a payment and further damaging your credit.
Contact Denver Bankruptcy Attorney Jon B. Clarke Today
If you are overwhelmed by seemingly insurmountable debt and are looking for a financial fresh start, contact trusted Denver Bankruptcy Attorney Jon B. Clarke for experienced help pursuing your best debt relief option.
To get answers from an experienced and esteemed lawyer, contact us today. We encourage you to complete our Business or Consumer Debtor Analysis Form. You can also get answers from Denver Bankruptcy Attorney Jon B. Clarke by calling our firm at (303) 779-0600 or (866) 916-3950 or by emailing us using the contact form on this page.