6 Stranger Things That Affect Your Credit Score

The series Stranger Things, if you may have noticed, is quite strange. Particularly strange extra-dimensional creatures hell-bent on destroying the known universe for some strange reason - sounds strange enough.

You don’t need to worry about those strange things, however. Believe it or not, there are stranger things going on in your credit report. So forget everything else and get ready to defend yourself against the strange entities that wreak havoc on your credit score.

The Ambiguity of Credit Scores

When it comes to your credit score, there are several things that may seem confusing. For instance, you may think that you are pulling all the right strings, yet find that your credit score takes a beating. You may think that since you are making your monthly payments on time and not maxing out your credit cards, your credit score will only rise. Unfortunately, this is not always true.

Your credit score can be adversely affected by several lesser-known factors.

Six Things That Wreak Havoc on Your Credit Score

1. Avoiding credit: You may think that if you have no credit cards with which to borrow, your credit score will be on top. Unfortunately, it does not always work that way. It may even seem counterintuitive, much like the Upside Down. After all, it makes more sense to have a high credit score if you have no debts and loans. In reality, it is not all that simple.
   Credit score is calculated based on the appropriate use of a particular mix of credit products. If you have been avoiding credit products such as credit cards, you would get what is known as a ‘thin file.’ A 'thin file' means that there is not enough data to assign you a credit score.

2. When you close your unused credit card account: It may seem natural to close the credit card accounts that you have no plans of using. The problem is that doing so will lower your credit score. Your credit utilization ratio influences around 30% of your credit score. This ratio measures the credit used against the credit limit. For best results, keep this ratio below 30% of the credit limit.

3. Taking credit offers: It can be pretty infuriating to know that even if you do take advantage of credit offers, you are penalized. Yes, you guessed it right; even this penalty has to do with your precious credit score.
   Every time you take a credit offer, the loan provider starts a hard inquiry into your credit history. The problem here is that each hard inquiry brings down your credit score a little bit. Remember that there is also a maximum limit of inquiries allowed by the creditor for getting approved.

4. When you consolidate your credit debt to a low-interest card: Let’s go back to the credit utilization ratio. The issue is that even if the rest of your cards have zero balance, one maxed-out credit card is enough to make your credit score suffer.

5. Administrative mistakes in the credit report: Mistakes in the credit report is common. As you can understand, this is capable of making your credit score go haywire. The score can be brought down sharply by a great degree when the mistake recorded is significant, even if not your fault at all.
   These mistakes happen for several reasons. For instance, people having common names are more vulnerable. If you face a similar situation, here’s what you need to do. You can get a credit report per quarter from the credit bureaus. Follow the instructions provided by the agencies to detect any mistakes, and make sure that you report them immediately.

6. Not paying bills: You may not pay a bill for just about any reason. You are safe for as long as the lender or service agency remains oblivious. If they do find out about your exploits, there will be a black mark for that in your credit report, while delinquent accounts will be given over to a collections agency.

Conclusion

To conclude, there are several things which may unexpectedly and negatively influence your credit score. The best way to combat them, whether they are the monsters from Stranger Things or those in your credit score, is by knowing them. After all, knowledge and financial education is power.

Check your credit score regularly to stay updated. Use credit well to stay credit healthy.