Lesser-Known Factors That Can Negatively Impact Your Credit Score
While missing payments and high credit utilization dominate as reasons for poor credit scores, several lesser-known factors can also cause unforeseen hits to your creditworthiness.
This in-depth guide examines under-recognized issues that deteriorate credit scores, covering:
•Balances on store credit cards
• High hard inquiries
•Lack of credit history
•Closing old credit cards
•Too many credit limits
• Opening multiple accounts
•Address changes
• Cosigner releases
With this context, consumers can avoid common pitfalls that sabotage credit scores and implement strategies to mitigate these hidden risks.
Store Credit Cards
Having balances on retail store cards can lower credit scores because:
• They often have high interest rates and limited benefits.
•Your total credit utilization rises as these balances are added.
•Payment history for these cards is reported less frequently.
To minimize impact:
• Only charge what you can pay in full each month.
•Avoid closing store cards to retain more available credit.
Hard Credit Inquiries
Each application for new credit generates a hard inquiry that slightly reduces scores. The impact:
• Fades over 12-24 months as inquiries “age.”
•Is amplified for multiple inquiries in a short period.
To minimize impact:
• Limit applications to needs for major purchases.
•Bundle applications to count as a single inquiry.
Lack of Credit History
If you’re new to credit, you’ll lack:
• A lengthy history of on-time payments.
•Diverse credit types that demonstrate responsible use.
To build a positive history:
•Open a starter credit card to create a payment trail.
•Add an auto loan or student loan over time.
