Categories: Lifestyle

Sneaky Things That Could Be Killing Your Credit Score (And How To Change That)

Want a credit card with good rewards? You need a good credit score. Want a loan with a low interest rate? You got it: good credit is an absolute must! A strong credit score is one of the keys to financial health. But what credit score is considered good? It can be tough if you aren’t paying close enough attention.

Scores operate between 300 and 850, and, according to, anything above 700 is considered good, and anything above 750 is considered excellent. These definitions can vary depending upon the lender, but even if scores of 650 can secure a loan, interest rates may get higher as scores decrease. While working to raise your credit score, watch out for these things you didn’t know could hurt it.

Applying For More Credit

Part of building up credit and figuring out what credit score is considered good is by diversifying it (see below). But applying can result in a hard inquiry, where a company runs a credit check on you and your credit is docked a few points for up to two years. This can happen when you apply for a loan, a credit card and even when you sign a new cell phone contract or move money from a big bank to a smaller credit union. So be careful.

Not Diversifying Your Credit

On the other hand, applying for credit is necessary in order to improve your credit score’s health. Part of your score is calculated based off the type of credit you have. You want to have a mix of revolving accounts — where you pay a certain amount each month, like credit cards — and installment accounts, or fixed payments, such as student loans, mortgage loans and car and house payments. Try to mix up the types of cards you have — retail credit cards, gas credit cards and bank credit cards.

Canceling Cards You Aren’t Using

While you want to make sure that you’re paying off each credit card, that shouldn’t be the end of the story. Don’t cancel cards that you aren’t using — it will reduce your total credit amount and shorten the age of your credit history, both of which are factors that hurt your credit score. Be aware that if you stop using a card, the company may cancel it for you — to avoid this, make small purchases once a month that you immediately pay off.

Having High Credit Card Balances

Even if you’re paying off your balance each month, approaching your credit limit on a regular basis can damage your score. Try to keep your credit utilization around 30 percent, per NerdWallet, but, of course, the less the better. To ensure a balance doesn’t sneak up on you, treat the card like a debit card, and pay off the balance each time you use it.

Not Checking Your Credit Score

There are a lot of services that can send you a free credit score on a regular basis, and you should be monitoring it as regularly as possible, so familiarize yourself with places like CreditKarma and FreeCreditReport, among others. Watch out for discrepancies or errors, and remember to get a summary of where exactly your score is being dinged so you can tailor an approach to raising it.

Lead image via Getty

Kim Bussing

Kim Bussing is a writer and editor who covers lifestyle, finance, entertainment, technology, and business for Knew Money. She is passionate about discovering new trends and helping demystify the nuances of finance.

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Kim Bussing

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