4 Surprising Things That Affect Credit Score

things that affect credit score
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When deciding to buy a home, it’s important to understand all the factors that go into being approved for a home loan. While you’ve probably been told to keep you credit score high, you may be wondering if there are any sneaky ways to ding your score. Here are 4 surprising things that affect credit score.

4 Surprising Things That Affect Credit Score

Parking tickets

A parking ticket is one of the most surprising things that affect credit score. Leaving a parking ticket unpaid long enough will prompt your city to send it to collections. Any time a bill goes to collections that involves outstanding debt, it can damage your credit score. Collection accounts can remain on your report for seven years, though your score should improve the further and further you get away from your delinquency date.

Closing a credit card

You may think that closing a credit card will help your credit since it’s tidying up your credit lines, however this is not the case. If your other cards are bumping against their limit, you could wind up taking a credit score hit because you’re lowering your overall available credit. So if you want to close a card, just make sure to do it after you close on your home loan so you don’t risk your credit score falling.

Requesting a credit line limit increase

While you may think you qualify for a credit line increase, your bank will need to run your credit to confirm. This will generate a hard inquiry on your credit report, which can ding your credit score. Same goes for if you want to lower your annual percentage rate. Your bank will likely pull your credit to see if your standing justifies the change. A good rule of thumb is to always ask your bank if an action requires a credit pull, that way you aren’t out of luck if you want to apply for a home loan.

Opening a new credit line

The first step a bank takes when you apply for a new credit line is to make a hard credit inquiry. If you only have one or two credit inquiries in the last 12 months, the impact will be minimal. However, if you are on the brink with 4 or 5 inquiries in the past year, the impact can severely drop your credit score. This is why lenders advise that when you apply for a home loan, wait to buy a new car and finance your kitchen appliances until after you’ve secured your home loan.

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