When it comes to our credit ratings there are obvious scenarios that directly impact our scores such as missing a loan payment or applying for more credit. In these situations, we can almost immediately expect an email notification stating there has been a change to our credit report. While some instances affect your score more than others, there is a gray area on what won't have a negative impact. Here, Timberline Financial will share six common setbacks that won't bring your score down. After all, credit scores play a key role in lenders' decisions on who to offer credit to, looking at everything from how much debt you have to your repayment history.
Marrying into Poor Credit
Although you may have joint bank accounts and apply for certain loans together, lenders look at each individual score separately. Your score is not dependent on your partner's, whether it is good or bad. With that said, it would be a good idea to go over each other's financials and credit reports before the big commitment so that you are both on the same page.
Losing a Job
Credit reports track the lines of credit you owe and if you pay your monthly payment on time. The amount of money you make has no direct influence on your actual credit score. Even if you were to lose a job, instances like this are not reported to the credit bureau, however, it can be harder to obtain loans and additional credit. Focus on paying the monthly minimum on bills to keep your accounts in good standing.
Overdrafting a Bank Account
This is a common oversight that many of us have encountered. While you may be hit with some hefty fees from your bank, your overdraft won't get reported to the credit bureau. A rule of thumb is to leave a chunk of money in your savings account and link it to your checking so if it gets overdrawn, funds will automatically get transferred and spare you any penalties.
Hanging on to a Paid Off Credit Card
If you are unable to pay your balance in full, the next best thing is meeting the minimum payments which will keep your score from dropping. With that said, if you do pay off your credit card it is best to keep the line of credit open rather than canceling the card entirely. This will help your credit utilization ratio which is ultimately how much unused lines of credit you have available verse what you currently owe.
A Late Utility Payment
Utility companies do not report to the credit bureau the way credit card companies do. If you miss your utility payment, you don't have to worry about it dropping your score. It is important to note that after a certain amount of time of missing utility payments, you could lose service. After enough time has passed depending on the utility company's policy, they could send your unpaid bill to collections which will get routed to your credit report.
Forgetting to Pay a Doctor's Bill
These are easily overlooked since it can take some time before healthcare providers and insurance companies work out what the patient owes. By the time we receive a bill, it is forgotten about. Don't worry, medical providers do not report late payments. A lot of times, providers will work with individuals on smaller payments if necessary, so it's important to communicate with them rather risk any late fees.
During these challenging times, a lot of companies have adjusted their policies to meet their customer's needs. If you're having trouble meeting your monthly payments, it's always a good idea to pick up the phone and call. Whether it is a doctor bill or your rent payment, there is no harm in asking about your options on repaying.
If you are burdened with high amounts of credit card debt and are struggling to make your payments, or you’re just not seeing your balances go down, call Timberline Financial today for a free financial analysis.
Our team of highly skilled professionals will evaluate your current situation to see if you may qualify for one of our debt relief programs. You don’t have to struggle with high-interest credit card debt any longer.