What is Affecting Your Credit?
If you have been through the process of buying a home or even a car you know the importance of your credit score and how it can impact your purchases. You probably know the most common things that can affect your credit, but there are some other things that may surprise you that you should be aware of.
For instance, it is widely known that things like late payments or high credit balances will hurt your credit score but did you know that closing a credit account could affect your credit as well? If you close an account you will lose all of the positive credit history that you have built with that account. The length of credit history accounts for 15% of your credit score so build your credit wisely.
Late bill payments can severely affect your credit score but did you know even unpaid parking tickets or past due library fines can also be sent to collections. 35% of your credit score is based on your payment history so you always want to pay any and all bills on time.
When you go to purchase a home or a car your credit will need to be accessed. Depending on who is checking your credit the inquiry is labeled as either a hard inquiry or a soft inquiry. Hard inquiries do affect your credit as these indicate you are actively applying for some type of credit such as a mortgage. Inquiries to your credit fall under the new credit category which accounts for 10% of your credit score. One hard inquiry to watch out for is car rentals. While not all car rentals do credit checks, some companies will do hard inquires if you use a debit card.