3 Hidden Hiccups That Could Be Hiding on Your Credit Report
Hello Money Masters!
Hidden surprises are typically a good thing. There’s finding money in the pocket of an old pair of jeans, bumping into a friend you haven’t seen in a long time, or discovering your favorite candy bar in the pantry that you completely forgot you bought!
But when it comes to your credit report, it’s better to know exactly what’s going on there. Hidden surprises and credit go together like pickles and ice cream…they just don’t mix. So, beware of these 3 credit culprits that could be hiding on your report and lowering your score.
Surprisingly High Balances
You might check your credit one day only to find that your balances are too high; even though you keep your credit utilization rate low and pay off cards each month. What gives??
(Credit utilization rate is the amount of credit you are using divided by the amount available: balance divided limit.)
So, what is happening here is that the credit company has not reported your current balance yet at the time you paid it. For example, you paid a $700 balance on the 15th but the company reported it on the 13th.
The fix: you’ll want to make your payments before the reporting date. Try to find out when the credit company reports. If you are unable to find out this info then try making payments on different dates.
The Wrong Type of Credit
Credit can be categorized in 2 ways. There’s installment loans and there’s revolving credit. Installment loans are monies borrowed at a specific amount at the time of approval and paid back monthly. An example of an installment loan would be a car loan or a purchase from a furniture store.
Revolving credit is when a limited amount is given to you to borrow to make purchases at your discretion. The most common example is a credit card.
Here’s the surprise problem: sometimes an installment loan can be reported as revolving credit. If this is happening, you’ll want to pay that debt off as soon as you can. Another option would be to consider a personal loan which would be reported properly as an installment. Future lenders will want to see different types of credit on your report which in turn can boost your score.
Mysterious Hard Inquiries
A hard inquiry (or hard hit) on your credit affects your score. Too many of these, especially in a short time frame, can affect it negatively. These inquiries are usually expected when you apply for a credit card or loan.
However, unexpected hits can happen from places you didn’t realize. These can be from cable providers, cell phone companies, rental car facilities and even utility providers.
What you can do when signing up for a service from these types of companies is ask if there is an alternative method of security than running a credit check, such as using cash instead for payments or deposits.
Regularly checking your credit report and score is always a good idea. You want to be able to identify those items that may be negatively affecting your credit, especially the sneaky hidden culprits. When it comes to being surprised, let’s leave that for birthday parties and lottery tickets!
Blessings to you all,