people know that making late payments, skipping payments
or filing for bankruptcy are surefire ways to ruin their
there are more subtle, often unrecognized, things people
do that may damage their credit scores and spook
would-be creditors. In turn, that can trigger
wide-ranging financial consequences — from paying
higher interest rates and insurance premiums, to getting
rejected for a loan, to forking over a higher security
deposit or even getting turned down for a job.
of the potential missteps is when shoppers are enticed
by too many instant in-store credit offers — the ones
that promise 10 percent off or more on a purchase just
for signing up for a credit card.
potential creditors may view people who open multiple
accounts in a short period of time as being in financial
addition, opening up all that credit could hurt credit
scores, which are affected by the average age of a
person’s credit accounts. The older the accounts, the
better, said John Ulzheimer, credit expert with
CreditSesame.com and formerly with the credit scoring
if you’ve just added a bunch of accounts, you’ve
made your credit report look younger, maybe a lot
younger. It takes time for those accounts to age and the
average age of your credit history to grow again,"
suggestion for people who want the (in-store) discount
is to think about the downside," Ulzheimer said.
"Especially if you want to go out and buy a home or
a car. You’ll be in a higher interest rate tier."
thing potential creditors don’t like to see when they
pull a credit report is high credit card debt.
people think that if they make payments on time, they’ll
have good credit," Ulzheimer said. But that may not
be the case.
main problem with credit card debt is it’s a high-risk
type of debt," he said. "It’s not secured by
an asset like a home or a car. So if you have as little
as $10,000 in credit card debt on cards that are maxed
out, you’d be surprised how low your credit scores can
be, even if you are making payments on time.
good news is, if you can pay (the debt) down, your
scores will improve in a short period of time."
cash advances and consistently making only minimum
credit card payments also can cause problems. Doing
either can signal to a card issuer that the customer is
under financial stress and is at higher risk for
it or not, there are certain credit card issuers that
will hold certain types of transactions on your credit
card against you," Ulzheimer said.
who have poor credit and take cash advances generally
run into the most trouble, he said. "Card issuers
are already looking at them as high risk. They are
already on a short leash."
card issuer may react by suspending the card’s credit
line, canceling the card or closing the account at
of those moves could hurt the cardholder’s credit
often-overlooked threat to a credit score is co-signing
for a loan.
being on the hook for the money in the event of a
default, co-signers will see their credit scores dip the
moment they sign and likely plunge if any payments are
entire debt also goes on co-signers’ credit reports,
which counts against them if they apply for a mortgage
or other form of credit.
almost like an afterthought that some people willingly
put their name on a contract and not really think
through what they have just done," Ulzheimer said.
"When you co-sign for a loan, you might as well be
applying for it on your own. The impact is really no
also could lead to some uncomfortable personal moments.
can be very awkward at holiday dinners if a relative
across from you defaulted on a loan that you co-signed
for," he said.