Five Things That Can Harm Your Credit Score

Thinking about applying for a home mortgage?

Make no mistake, your credit score will matter. Here, Realtor.com discusses five credit score pitfalls to avoid to ensure that you get the best possible mortgage and interest rates

1. Too many inquiries

Shopping around before choosing an institution for a car loan can help you find the best rate, saving thousands of dollars during your loan’s lifetime. Although you may be saving, however, it’s best to use moderation. Each time you receive an interest rate quote, lenders pull a hard inquiry that shows up on your credit report. If you request these inquiries for longer than 14 days, each quote shows up individually. When you are comparison shopping for a loan, it’s best to gather your quotes within two weeks so your credit will take less of a hit.

2. Little things add up

Unpaid bills from various sources can cause your credit score to plummet if they’re unresolved. If you think that library late fee from 15 years ago doesn’t matter anymore, it could if the library system decides to turn over that account to collections or marks it as delinquent.
In most cases, this is an easy fix and just a matter of settling the outstanding payment. Be sure to pull your credit report and check for these types of issues.

3. Incorrect information

You also will probably want to pull your credit report to see if any errors have occurred. Businesses can make mistakes, and it could drag down your credit score if your credit report contains incorrect information about your financial records. If you find that your report does have an error, call the credit bureau that issued the report and file a claim. Correcting errors can be tedious work, but it’s worth the effort.

4. Using credit too much

Maxing out your credit card can cause more harm to your score than you might think. What matters is how much credit you have and how much credit you’re using. For example, if you have a $1,000 line of credit and you charge $999 each month, you’ll earn a black mark on your credit score even if you pay off every dime when the bill is due. Maintaining a high credit utilization ratio will hurt your score, so try to keep balances low on your lines of credit.

5. Not using credit at all

No credit history means there’s nothing concrete to show that you’re a responsible user of credit who can manage balances and payments. Inactive accounts may even default to closed over time, and that too can harm your score.

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