There are many things that can affect your credit score, and some of them are incredibly surprising.
While it makes sense that past due accounts or bankruptcies could affect your credit score, there are many things that aren’t so obvious that can damage your credit score. If you’re trying to rent a home, your credit score is one of the main things landlords will use to either approve or deny your application, and it’s important to know exactly what can affect your credit score. In our last blog, we went over a few surprising things that can affect your credit score. Here are a few more:
In our last blog, we learned that using too much of the credit you’re approved for can hurt your credit score, but did you know that not using your credit enough can also have ramifications on your credit score? As counterintuitive as it may seem, not having debt or using your credit too little can hurt your credit score. Creditors want to encourage you to open a variety of different accounts and use them, and they will reward you with a higher credit score when you do. Not using a card could also lead the issuer to close the account after a lengthy period of inactivity, and that could hurt your credit score, particularly if you’ve had the card for a long time.
#8. Paying Off a Loan
As we mentioned above, having a variety of different kinds of accounts is a positive thing for your credit score. There are essentially two kinds of credit accounts credit bureaus look for when determining your score: revolving lines and loans (i.e. credit cards and lines of credit) and installment loans (i.e. car payments and mortgages). Credit bureaus will reward you when you manage both kinds of credit accounts. If you have just one installment loan and you pay it off, then you are limited the diversity of accounts in your credit report, which could actually hurt your score.
#9. Credit Disputes
When a certain line of credit is in the midst of a credit dispute, the algorithms that calculate credit scores will often ignore it altogether. Since one line of credit can affect everything from your debt utilization ratio to credit history, it can have a huge impact on your credit score if algorithms don’t take it into account. If you are in the midst of disputing a card or line of credit, you might be better off putting anything that requires a hard credit pull on hold.
#10. Failing to Pay Your Taxes
While the Internal Revenue Service (IRS) doesn’t typically report your tax payment history to the major credit bureaus, if you leave put off paying your taxes for long enough, it can cause your score to take a major hit. After a while, the IRS will file a Notice of Federal Tax Lien against you to recover the taxes you owe, and this can have huge ramifications on your credit score.
#11. Anything That Requires a Hard Credit Inquiry
There are two kinds of credit pulls — soft credit pulls and hard credit pulls. A soft credit pull won’t affect your credit, and it is done when a company pulls your credit history for a background check, like when applying for an apartment or a job. A hard credit pull does have an affect on your credit score, and these types of credit pulls occur when creditors are making lending decisions, like when you apply for a loan or ask for a limit increase.
Your credit score isn’t as straightforward as you may think, and there are many things that can affect it. If you have bad credit, and it is affecting your ability to rent, it’s time to contact Ways 2 Save. Visit us online today to learn how we can help you find the right bad credit apartment for your needs.