Common habits that can hurt your credit score, part two

Earlier this week, we began a discussion of the ways that Atlanta readers can unknowingly damage their credit scores, including failing to pay library late fees and parking tickets, and not filling out a change of address form when you move. Today, we will discuss three additional common habits that can harm your credit score and potentially result in long-term financial issues.

This may come as a surprise to many, but closing a credit card can significantly damage your credit score. This is because doing so will decrease your credit limit, thereby increasing your ratio of used to available credit, also known as credit utilization. In addition, if you close an old card, if could decrease the average age of your existing accounts. Because older accounts are better in the eyes of the credit reporting bureaus, a drop in the average age could also cause your credit score to decline.

Similarly, getting a credit card with no listed limit could harm your credit rating, even if it seems like a good thing for you. This is because, when credit card companies do not report a credit limit to the credit bureaus, they assume that the limit is zero. Therefore, any amount you put on that card is going to be seen as going over the limit, and it will significantly increase your overall credit utilization.

Finally, if you are interested in receiving your credit score, it is best if you go through the credit reporting agencies to do so. Asking a banker or similar financial professional to check your score will result in a “hard inquiry,” which will harm your credit score, on your report. Because it is considered a “soft inquiry” when you request your own score, it is best if you go this route.

Source: U.S. News & World Report, “7 weird ways to hurt your credit score,” Jim Wang, June 11, 2012