Your credit score is impacted by so many things in so many ways. There are factors that can greatly impact your credit score in a positive way, but there are some that can easily bring your score down more than you might think.
Read below for a look at some of those factors that can bring your credit score way down, and what you can do to protect yourself and your future.
Closing an Old Credit Card
If you have numerous credit card accounts, then you might be tempted to close few of them in order to consolidate and keep only a select few open (i.e. the ones you actually use the most often). However, closing down your credit cards that you barely use can really affect your credit score in a negative way.
You might think what you are doing will improve your score, but it will actually hurt it. This is because in doing so, you will be reducing the amount of credit you have available.
The amount of credit you have available makes up 30% of your credit score. As a result, your credit proportions will change. It will appear that you have lost credit and that you owe more than you have available, thus bringing your score way down.
The best thing for you to do is to keep these lines open. Since you already have them open, you might as well use them to build credit rather than to close them and bring your credit score down.
Opening New Credit Cards
Secondly, you might be tempted to open new credit cards to have the reverse effect of the first step. You might be thinking that by opening new credit cards, your credit limit will increase and your credit score will jump up since you have more credit available to your name.
However, this thinking will backfire on you because opening multiple new credit cards causes a credit pull on your account. Each time you open a new line of credit, such as a new credit card, there is a pull on your credit score, which drops your score down.
If you are opening up multiple credit cards, then you will see your credit score plummet, even if this is not what you originally intended to happen.
Refusing to Use Your Credit Cards
Lastly, you might think that by not using your credit cards, your credit score will go up. However, this is not the case either.
If you don’t use your credit card for a period of time (generally, six months), then your credit card company might see that you are not bringing them revenue and could decide to close your account with them. This would result in a reduced credit limit that you have available to your name, which will lower your credit score as well.
By keeping these considerations in mind, you can avoid sabotaging your credit score and make the necessary adjustments needed for a high score.
