The next time you check your credit score, you might discover it has taken a tumble because of a seemingly small mishap on your part. A seemingly small stumble, such as forgetting to return library books, can cause your credit score to plummet.
1. Using a debit card to make a car rental reservation
If you are planning to rent a car and use a debit card to make the reservation, that could trigger the rental car company to require a credit screening. That can ding your credit score, according to credit agencies.
A better option is to confirm the reservation with your credit card to avoid the unnecessary credit inquiry. Then, settle the final bill with your debit card when you return the vehicle.
2. Medical debts
Due to credit industry changes enacted in 2016, medical debts are reported only after a 180-day waiting period. That’s designed to allow enough time for insurance payments to be applied.
Also, it’s possible to get a credit reporting company to remove medication collections, from your credit report once the debt is paid, or is being paid by the insurer. Still, tending to medical bills promptly can help you avoid a credit blemish in the first place.
3. Failing to pay taxes
If the Internal Revenue Service or the local tax collector has sent you a hefty bill for unpaid taxes, you can run, but you can’t hide. The IRS will eventually track you down and demand what they’re owed. If you fail to respond, expect your credit score to take a dive.
It’s best to work things out with the IRS through a payment plan or let a reputable expert help you with your tax debt.
4. Paying utilities late
If you are even slightly past due on a bill from a cellphone, utility company, or another provider of recurring services, chances are you’ll receive several notices before services are terminated. Once the provider has had enough, expect to be turned over to debt collectors and subsequently reported to the three main nationwide credit reporting companies: Equifax, Experian and TransUnion.
5. Closing a credit card account
Closing a credit card account sounds smart, but in fact, it can hurt your credit score. Credit experts say closing credit cards is cited in “The 10 Most Common Credit Mistakes.”
Closing an account impacts what’s known as your “credit utilization ratio,” the percentage of your available credit that you are using. The lower your ratio, meaning the less of your available credit you’re using, the better your credit score will be.