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There are several number of things you do that can hurt your credit score. However, most of these actions that you take are seemingly harmless. Here are three:

1) Getting Too Many Loan Rate Quotes Online

Loan rate quotes online are very easy to get. You can get a quote on your student loan, personal loan, car loan or mortgage loan in seconds. Because it is so easy and simple, many individuals compare several companies all at once in order to get the best deal possible.

The problem with this behavior is that credit bureaus count each online quote as an inquiry or “hard pull.” The resulting effect of comparing too many companies online by asking for quotes is that your credit score will fall as a result.

Your best strategy is to research prospective companies and narrow the list to two or three that you are interested in dealing with. This method will ensure that the number of inquires to your credit report is minimal and will not adversely affect your score.

2) Closing Many Credit Accounts Within A Short Period

It seems logical that you should close unused or infrequently used credit accounts. From a simple financial management standpoint, this seems like a good practice. However, closing these accounts can work against you and effectively hurt your credit score.

It is important to note that most credit bureaus like to see individuals have a good long-term credit history. Long-term credit history denotes stability in all areas of your financial life. When you close a credit account that has been open for ten years it will more negatively impact your credit score than closing an account that was opened a year ago.

If it’s really important to you to reduce your credit card accounts, consider first closing your most recent accounts. Leave old accounts open as long as you can.

However, if your credit score is not a major issue for you, it makes good financial sense to close all the credit accounts that are not needed. You will experience a short-term dip in your credit score but it will rebound in the long run.

3) Don’t Shy Away From Loans Or Debts

While it is good financially to be debt free, it also means that you have no established credit history. No credit history will result in a lower credit score for you. Lenders want proof that you can manage credit and the only measure they have is if demonstrate this ability by having some form of past credit history.

If you have no credit accounts at all currently, you might consider opening a low balance credit card. This can boost your credit score if you use it regularly to pay for things that you would by on a normal basis anyway, then pay the outstanding balance in full and on time each month.

The credit score system is designed more from the lender’s perspective rather then the consumer’s perspective. Therefore, the techniques necessary to improve you credit score can seem counterintuitive to proper financial habits like closing unused credit accounts. Nevertheless, maintaining good financial habits will give you peace of mind and will work well for you over time.

Related posts:

1. Does Closing A Credit Card Hurt Your Credit Score – And Other Questions
2. Will Rate Shopping Hurt My Credit Score?
3. Simple Credit Score Explanation
4. How Do Late Payments Affect My Credit Report And Score?
5. Free Annual Credit Report Online