5 Counterintuitive Ways You Can Ruin Your Credit

Your credit score is one of the most crucial numbers in your financial life, but protecting it isn’t always straightforward. While most people understand the risks of missed payments or carrying too much debt, there are surprising ways you can unintentionally damage your credit. Learning more about what these actions could be will help you keep your credit safe and avoid pitfalls. Here are five that you should avoid:

1. Closing Old Credit Cards

Many people have old credit cards cluttering up desk drawers that are not really needed anymore. But before you close an old card you never use, understand that the length of credit is one factor of good credit, so closing an old card could lower your score.

2. Paying Off All Debt

Lenders like to see that you can manage debt. Paying off all debt can lower your score. Keeping a small, manageable balance and regular payments might be a better strategy.

3. Co-Signing Loans

Helping someone by co-signing a loan might seem like a generous offer but understand the risks. If they miss even one payment, that bad debt will show up on your credit report and could dramatically affect your credit score.

4. Applying for Credit

If you are considering a new car or home loan, you may think applying to multiple places is the responsible thing to do. Too many inquiries in a short amount of time can lower your score.

5. Ignoring Small Bills

Take all your bills seriously. Even small bills like cable or the pool service could end up in collections if not paid on time. A collection can negatively impact your credit score for up to 10 years.

Taking your credit seriously is only the first step. By staying informed and proactive, you can safeguard your credit against these unexpected pitfalls and ensure your financial health remains strong. Remember, maintaining a good credit score isn’t just about avoiding mistakes; it’s about building habits that set you up for long-term success.