2011 Top Five Threats to Your Credit Score

December 24, 2011 by  Filed under: Credit 

Having a good credit score is important if you want to get approved for credit cards and loans and if you want to get approved at a good interest rate. While you can generally keep a good credit score by paying your bills on time and paying back what you buy, there are some other threats to your score that you may not immediately recognize.


Your current employer may be listed on your credit report, but your employment status isn’t a direct factor into your score. However, losing your job could indirectly hurt your credit in two ways. First, if you don’t have enough savings or unemployment benefits to pay your bills, accounts could fall delinquent or be sent to a collection agency. Second, if you have to rely on your card to make ends meet, you’ll drive up your credit utilization which will hurt your score.

Inactive accounts

If you want the credit scoring calculation to consider a credit card account, you have to use it periodically. Otherwise, the card issuer may stop sending monthly updates to the credit bureaus. Keeping accounts active, even those with zero balances, can help your credit score in terms of utilization. Credit cards with a 0% utilization can bring down your overall utilization and balance out cards with higher utilizations.

Other unpaid bills

Not all accounts are reported to credit bureaus, but some can wind up on your report if you don’t pay them. Unpaid parking tickets, library fines, even your kid’s cafeteria fees can all wind up on your report if they’re turned over to a collection agency. It’s important that you pay all your debts, no matter how big or small they may be. Make payment arrangements with your biller if you can’t afford to make payment right away. A payment agreement can keep the account from being sent to a collection agency.

Misreported credit limits

Credit card issuers may report your credit limit as lower than what it really is. For example, you may have received a limit increase that hasn’t been reflected on your credit report. Or, the credit card issuer may be intentionally misreporting your limit to keep your name off certain prescreened offer lists. An inaccurate limit can cost credit score points, especially when you have a credit card balance, because it makes your credit utilization look higher than what it really is.

Credit card fraud and identity theft

Fraud and identity theft may be the biggest credit score threat of all because these accounts often go undetected for months. For example, an identity thief can open a new account in your name and use it for several months until the account is closed. You may never find out unless you try to apply for credit and be denied because of the account. That’s one of the reasons it’s so important to monitor your credit periodically throughout the year. Keeping an eye on your credit lets you catch and resolve fraud and identity theft quicker.

Make sure you watch out for all the things that can hurt your credit score unexpectedly.

This guest post was written by Steve Dowell, a professional writer specializing in topics related to personal finance, debt relief, credit repair and more. Pass through creditrepair.org for more tips and advice.

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