Six Unseen Actions That Lower Your Credit Score

With interest rates showing signs of decreasing and the market becoming more stable, many people might start considering buying a home. If you're planning to finance your home purchase with a mortgage, it's crucial to maintain a high credit score.

Today, let's explore four seemingly minor actions that can negatively affect your credit score.

1. Closing Old Credit Card Accounts 

   With so many credit card products available today, it's easy to switch to one with better benefits and stop using your old cards. However, closing old accounts can significantly impact your credit score by affecting your Debt to Credit Utilization ratio. This ratio measures your total debt against your available credit. Keeping it below 30% helps improve your credit score. Closing old accounts raises this ratio, potentially lowering your score.

2. Opening New Credit Cards 

   It might seem like having more credit cards would help your score by increasing your available credit, but that’s not necessarily true. Every time you open a new credit card, your score can drop by about 5 points. While 5 points may not seem like much, it can be significant when you're on the edge of a score category, like moving from "good" (700-759) to "excellent" (760+), which affects your interest rates.

3. Not Using Your Credit Cards 

   The longer you keep a credit account open, the more positively it impacts your score. However, if you don’t use your credit cards for an extended period, the card issuer might close the account. This shortens your credit history and can negatively affect your score.

4. Co-signing for Someone 

   Co-signing for a loan is the same as taking on the debt yourself. Since you don’t have direct control over managing the payments, it poses a significant risk to your credit score. Always think twice before co-signing.

Today, we looked at four hidden behaviors that can harm your credit score. Stay tuned for more tips to help you maintain a healthy credit profile!

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