5 Unexpected Things That Lower Your Credit Score

Your credit score is one of the most important digits in your life. A high credit score will get you the best interest rates on loans, credit cards, and more. A low credit score can cost you thousands of dollars in higher interest payments. There are a lot of things that can impact your credit score – some of them might surprise you. Here are 5 unexpected things that lower your credit score:

1. Having Too Many Credit Cards
2. Applying for New Credit Cards
3. Closing Old Credit Cards
4. Missing a Payment
5. Having a High Balance on Your Credit Card

Let’s take a closer look at why these things can impact your credit score.

1. Having Too Many Credit Cards: While having a credit card can help build your credit score, having too many can actually hurt it. This is because having too much available credit can make lenders wary of how much debt you can potentially accumulate. It can also make it harder for you to manage all of the accounts, and if you miss payments, it can lead to a decrease in your credit score.

2. Applying for New Credit Cards: When you apply for a new credit card, the lender will perform a hard inquiry on your credit report. This can temporarily lower your credit score by a few points. Additionally, applying for too many credit cards at once can signal to potential lenders that you’re in financial trouble, which could lead to a decrease in your credit score.

3. Closing Old Credit Cards: Closing an old credit card account can have negative consequences on your credit score. This is because closing an account reduces the amount of available credit you have, which can increase your credit utilization rate. This is the ratio of your credit card balances to your credit limits. A higher utilization rate can hurt your credit score.

4. Missing a Payment: Missing a payment is one of the most significant things you can do to hurt your credit score. Payment history is one of the most important components of your credit score, so just one missed payment can negatively impact your score for years.

5. Having a High Balance on Your Credit Cards: Having a high balance on your credit cards, especially if you’re close to maxing out your credit limit, can negatively impact your credit score. This is because it can signal that you’re relying too heavily on credit, which can be viewed as a risk factor to potential lenders. Overall, it’s essential to keep an eye on your credit score and take steps to improve it when necessary. Paying bills on time, keeping credit card balances low, and limiting new credit applications can help you maintain a high credit score.