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Credit scores provide lenders a look into your financial history by analyzing five main factors, but a lot more than five things influence that important three-digit number.
You probably already know that it's important to pay your bills on time, keep a low ratio of debt compared to available credit (aka utilization rate) and maintain a long history of accounts in good standing. You may also be aware that it's helpful to limit new credit inquiries and have a diverse mix of credit products.
However, there are some less obvious situations that can also influence your credit, like having overdue library books and unpaid parking tickets.
Below, we review these two surprising examples along with 10 other little-known things that can impact your credit score.
- Credit limit increase requests
- Business credit cards
- Unpaid medical bills
- Phone payment plans
- Withholding rent
- Unpaid parking tickets
- Overdue library books
- Co-signing a loan
- Student loans
- Personal loans
- Car leases and auto loans
When you request a credit limit increase, your card issuer may perform a hard pull of your credit. This can temporarily ding your credit score by a few points. However, there are times when credit limit requests cause no harm to your credit score, like when your issuer does a soft pull of your credit or initiates an automatic increase.
If you're a small business owner or employee, the actions you take with your business credit card may affect your personal credit score. Business owners who are the primary account holder have the most liability and therefore the biggest risk to their personal credit. For instance, business owners who use the Capital One® Spark® Cash for Business can add additional employee cards for no charge. While this is convenient, they assume some additional risk by letting authorized users make charges on their credit line.
Payment history is the most important factor of your credit score and extends to more than your credit card and loan bills. Any unpaid medical bills may be sent to debt collections agencies after a certain period of time.
Installment loans, such as phone payment plans, may appear on your credit report and can affect your credit score. So if you want the latest iPhone and opt for an affordable two-year payment plan, make sure you keep up with the monthly payments.
If you withhold rent and utilities or break a lease without paying the lease-break fee, your lack of payment may be reported to the credit bureaus and negatively affect your credit. Landlords and utility companies typically don't report your payment history to the credit bureaus, but they are likely to report unpaid bills.
Nearly any unpaid fines, tickets, fees and general payments can cause damage to your credit score down the line, and that includes unpaid parking tickets. If you don't pay your ticket on time, it may be sent to collections.
This one may come as a surprise — if you return a library book late and don't pay the fine, the library may send your information to collections.
If a family member or friend needs help taking out a loan or opening a credit card, you may consider co-signing. However, this could affect your credit in three ways:
- A new inquiry can appear on your credit report.
- The account balance or size of the loan can affect your utilization rate.
- Last, any of their missed payments can show up on your credit history.
Similar to co-signing a loan, the new inquiry and size of a student loan appears on your credit report. In addition, your payment history influences your credit score.
A personal loan influences your credit just like a student loan. The loan inquiry, size and payment history are all reported to the credit bureaus.
You may take out some sort of car-related loan at some point, whether it's a lease or auto loan for the purchase of a car. The inquiry, size of the loan and your payment history will appear on your credit report.
Mortgages are likely the largest loan you'll ever take out and can have a huge impact on your credit score if you fall behind on payments. (Learn how the NFCC is offering free credit counseling to help you pay debt and prevent foreclosure amid the coronavirus.)
In order to avoid negative impacts to your credit score, maintain an on-time payment history and be aware of co-signing credit products, especially if the co-signer has bad credit.
Information about the Capital One® Spark® Cash for Business has been collected independently by CNBC and has not been reviewed or provided by the issuer of the cards prior to publication.