- #1 -- Incorrect information
- #2 -- Generating too many inquiries
- #3 -- Overusing your credit
- #4 -- Not using credit at all
- #5 -- Little things always add up
It doesn’t matter where in the world you rent – Cape Town, Los Angeles, Paris – your credit score is going to be important.
It is a fact of life that landlords are going to look very closely at that one number that will determine whether or not you will be able to afford the rent.
Many people don’t exactly know why their credit score isn’t as high as it should be, especially when they believe they’ve have been playing it safe all this time!
Any idea, obviously apart from not paying your bills, what else could hurt your credit score?
Here are a few simple things that can ruin your credit score:
#1 — Incorrect information
Quite a few people don’t realize that their credit record doesn’t just show you the amounts that you owe across different credit cards, loans etc, but it also provides detailed information pertaining to your credit history.
Businesses might make mistakes, so it would be a good idea to pull up your credit record and double-check.
Errors in your financial records are likely to have a negative impact on your credit score!
If your report has an error, you should call the credit bureau responsible for issuing the report and correct it immediately.
And yes, it might be tedious to get this sorted, but it is definitely worth it!
#2 — Generating too many inquiries
Don’t just go shopping around for a car (or house) every now & then, drop off the circuit, only to restart the process a handful of weeks later.
It’s best to use moderation!
When you receive a quote on interest rates, lenders pull up a hard inquiry that is shown on your credit record!
Did you know if these inquiries are requested over a period longer than 2 weeks, each quote shows up individually?
It is best to compare your quotes within a shorter timeframe (ideally less than 2 weeks) before you decide on a loan. This way your credit won’t take a hit.
#3 — Overusing your credit
Yes, this happens all too often.
Even if you use your credit card for daily expenses and pay it back in full, your credit record might still look worse for wear.
Maxing out your credit card can actually bring your record down. What matters here is how much credit you have and how much you spend!
For example, if you use up to 95% of your limit every month, you will have a black mark on your record even if you pay it off on time.
This is known as a credit utilization ratio and the higher it is, the more it will hurt your record. So, try to keep your balances low despite your limit.
#4 — Not using credit at all
However, the opposite of using credit is true as well: being scared of landing in a financial mess and avoiding purchasing on credit will definitely impact your score.
You will have no credit history that can show you are responsible for payments.
And inactive accounts that might be closed over time might also hurt your credit score.
#5 — Little things always add up
Several unpaid bills can hit your credit record quite hard, especially if they remain unresolved.
Heck, even that very long overdue late fee that you had to pay at the library can influence your credit score if it has been marked as delinquent.
Usually, this is easy to fix – you simply pay the amount that you owe.
To check what the exact outstanding amount is, pull up your credit record. Most credit bureaus allow for a free report per year!
All-in-all, you might not feel the above-discussed things that might ruin your credit score not fair, but the truth is that these are common mistakes that can be avoided in order to improve your credit score.
(Editor’s Note: This post was originally published in March 2018 on ImmoAfrica.net and has been revamped and updated since for accuracy and comprehensiveness.)
About the author: The above article “Renting? 5 Simple Things That Can Ruin Your Credit Score!” was written by Xavier De Buck, your top-producing Johannesburg real estate agent with Keller Williams Realty. Xavier has been nationally recognized and awarded for providing service excellence, exceptional property sales, whilst exhibiting the highest level of professionalism. With over 17 years of combined experience as a real estate agent, real estate investor and landlord, if you’re thinking of buying or selling a home in Johannesburg, Xavier would love to share his property knowledge and expertise.
© 2020, Xavier De Buck. All Rights Reserved.
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