3 (Dangerously Easy) New Ways to Ruin Your Credit Score

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Late payments and bouncing up against your credit limits are the typical do-not-do actions of the credit world. Like holiday hangover debt, we do our best to steer clear of those. Otherwise, you could hurt your credit score.

These obvious credit score hang-ups aren’t the only pitfalls to look out for anymore.

As more changes come to credit score models, there will be a next generation of do-not-dos that, if you like good credit, you must take care to avoid.

Stay on top of these three factors of your financial life, because they may one day push your credit score over the thin line between approval and denial if you aren’t careful.

Rent Payments

Experian, one of the big three credit bureaus, recently started including residential rental payment data on consumer credit reports. Luckily, Experian only reports positive data, so paying on time will help build most consumers’ credit. But by next year, Experian plans to add negative reporting to the mix, meaning that one late rent payment could hurt your credit score. Plus, instead of the 30-day period until a past-due account is considered delinquent (as with credit cards and mortgages); rent payments are usually considered late after only 5 days. More credit bureaus may start adding this data on how good—or bad—a renter you are.

RELATED: Could Being a Woman Hurt Your Credit Score?

Girl Looking At Credit ScoreYour Last 24 Months

Had an unfortunate bankruptcy or slew of medical bills that were out of your control in the last two years? It may cut your credit score even deeper. More credit score models could mimic the VantageScore model, a credit score that claims to be more predicative of risk because it bases scores primarily on a 24-month review of a consumer’s credit file. Before, long-standing credit history was a major factor in credit scores. Now, recent credit history could outweigh your past good deeds. If you’ve been misbehaving with credit in the last few months, your established history may not outweigh recent actions’ negative impact.

RELATED: 4 Credit Inquiries That Won’t Hurt Your Credit Score

Paying off a Loan

This isn’t actually a “new” factor, but one that many consumers don’t know. Paying off installment debt, such as a mortgage, auto loan, and student loans, effectively closes that account once paid in full. While getting rid of debt helps credit scores, closing a long-standing loan could also throw it off. See, Breadth and depth of credit is a significant factor in credit scores; eliminating an auto loan or mortgage from your credit mix could actually hurt your score. This is no different than closing out your oldest credit card account. You no longer have that credit history or credit type listed as “open” on your report, and your credit score may drop subsequently. As New Year’s Resolutions help consumers ditch debt, be cautious of all the ways your credit is affected.

These factors may not be hitting your credit score right now, but keep in mind that the credit landscape is constantly shifting.

Do yourself a favor and establish good credit habits now, keep track of your credit score to monitor any changes, and always ahead and around the corner when it comes to actions dealing with credit.

Credit Karma™ is a completely free credit management service that provides free credit scores, financial education, and personalized savings recommendations. We help more than 2 million consumers realize the everyday cost savings of having a good credit score.

  • ParisKaren

    I’ve read a lot that says you should keep a loan to prove payment history/raise your credit score etc, but at the same time the longer you have the loan the more you are paying in interest and losing the ability to invest the money you’re spending on the car payment. How much does it actually hurt your score to pay off early vs. the money you save in interest and how much you could be making by investing it instead of sending it to the bank.

  • Anonymous

    that last one is crazy to me. You get dinged for paying you bills on time and in full. So stupid.

    http://126king.blogspot.com

  • Anonymous

    that last one is crazy to me. You get dinged for paying you bills on time and in full. So stupid.

    http://126king.blogspot.com

    • Susiemiletello

      That is stupid!!  Oh well, I am paying off everything I can – car loans and all.  They can ding it all they want!  At least I won’t have the damn debt!!!

  • Anonymous

    that last one is crazy to me. You get dinged for paying you bills on time and in full. So stupid.

    http://126king.blogspot.com

  • Anonymous

    that last one is crazy to me. You get dinged for paying you bills on time and in full. So stupid.

    http://126king.blogspot.com

  • Anonymous

    that last one is crazy to me. You get dinged for paying you bills on time and in full. So stupid.

    http://126king.blogspot.com

  • Anonymous

    that last one is crazy to me. You get dinged for paying you bills on time and in full. So stupid.

    http://126king.blogspot.com

  • Jhessmer

    So how do you avoid the last one? Eventually, there is a last payment to a car loan and mortgage so is it just inevitable. Seems nuttty

  • Jhessmer

    So how do you avoid the last one? Eventually, there is a last payment to a car loan and mortgage so is it just inevitable. Seems nuttty

  • Jhessmer

    So how do you avoid the last one? Eventually, there is a last payment to a car loan and mortgage so is it just inevitable. Seems nuttty

  • Jhessmer

    So how do you avoid the last one? Eventually, there is a last payment to a car loan and mortgage so is it just inevitable. Seems nuttty

  • Jhessmer

    So how do you avoid the last one? Eventually, there is a last payment to a car loan and mortgage so is it just inevitable. Seems nuttty