5 Things You Didn't Know Could Ruin Your Credit!

Watch out for these harmful pitfalls that could ruin your credit and keep you from your new home.

When it comes to buying a home, car, boat and more, your credit score matters. By now you know there's no getting around the financial institutions that weigh on your credit score. But you may not know why your credit score is on a downward spiral, especially when you're trying to play it by the book and maintain flawless credit. So what's really going on that poorly affects your credit? Have you ever checked your credit score only to find yourself shocked and dismayed by the result? If so your credit might be affected by one of these sneaky pitfalls.

1. Generating hard inquiries:

When you start collecting quotes from various lenders, you're being financially savvy. Shopping around and choosing the right lender for a mortgage or a car loan will help you find the best rate possible -- and that translates into savings of much more money throughout the span of your loan. But there's a catch. When you receive a quote on interest rates, lenders look hard at your credit report. They get multiple inquiries within a 14-day span and are counted together. If you stretch out these inquiries over a longer period, each shows up individually. And too many inquiries can really hurt your credit.

2. Skipping out on the little things:

If you think an old library fine from 15 years ago can't hurt you today? It could, if the library system turns that account over to a collection agency or marks it as "delinquent." Unpaid bills -- including utility bills, medical bills and so on, that you thought you paid, -- can cause your credit score to plummet quickly if they're unresolved. In most cases, you can easy fix these matters by settling the outstanding debt you owe. So it is always to a good idea to pull up your free credit report and make sure nothing is weighing you down . Which leads us to another cause to ruin your credit

3. Incorrect information:

You need to pull your credit report regularly. Errors do occur and businesses do make mistakes. If your credit report has incorrect information about your financial records, this could weight heavy on your credit score. If you pull your report and find an error, call the credit bureau that issued the report right away. You'll want to file a claim and start the process of correcting any incorrect data. It can be long and stressful to correct these errors, but in the end it's worth the effort.

4. Utilizing your available credit a little too much:

If you use your credit cards for everyday spending and you pay off your balance in full and on time, you may be wondering why your credit score is still falling. It might be that you're only charging what's affordable and not carrying a balance month to month. What matters is how much credit you have and how much credit you're using. For example, if you have a $500 line of credit and you charge $499 each month, you'll earn a black mark on your credit score even though you pay off all $499. Maintaining a high credit-utilization ratio will hurt your score. Always keep your balances low on all lines of credit.

5. Not using credit:

Perhaps the easiest way to ruin your credit, is not using it at all. If you're afraid of messing up and getting into a financial disaster, or if your scared of the idea of using credit cards, you may negatively impact your score. By not using credit, you don't create a history that shows you're a responsible credit user who can manage your balances and payments. Inactive accounts may even closed over time, and that too can red flag your score. Whether you feel it's fair or not, the fact remains that if you want to purchase a home or car you need a good credit score. If you want to secure the best real estate deals available on the market,always watch out for these unseen score pitfalls that could ruin your credit.

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