5 Ways to Spoil Your Credit Score

Credit surprises have the potential to creep up on you if you aren’t careful. Your history of on-time bill payment and low account balances were good practices, but a few missteps could have consequences that go well into next year.

Here are five ways you might be setting yourself up for a credit nightmare without realizing it.

1. Sharing your New Line of Credit
   
   Sharing your good credit with someone you know and trust might not sound like a bad idea, especially when you believe the individual has the means to repay the debt. But if you cosign on a loan and the primary borrower refuses or cannot make payments as agreed, your credit could suffer. That's because when you list your name as co-borrower, positive and negative account activity will appear on your credit report.
   
   Cosigners have joint responsibility for loan repayment even if they have a verbal agreement that the other person will make the payments. Before you cosign on a loan, make sure you have the financial resources to make the payments in case the other borrower is unwilling or unable to live up to their end of the agreement.
2. Not Looking at Your Credit History Reports
   
   Failing to check your credit history reports could hurt your credit score. Inaccurate data that lowers your credit rating could appear on your report at one or more of the three main credit reporting bureaus: Equifax, Experian, and TransUnion. Bureaus do not have to notify you if your report contains errors, so it's crucial that you review the information they have on file. 
   
   Request a free copy of each report at AnnualCreditReport.com. Then, follow the dispute policies of each bureau to have false information removed from your reports. Checking your reports at least annually could also alert you to identity theft before it causes lasting damage.
3. Failing to Update Your Contact Information
   
   Did you relocate this year? Double-check whether you informed your financial institution, lenders, and credit card issuers about your move. It will help ensure you don't miss any special announcements, cost-saving opportunities, or payment due dates. Late payments can lower your credit score, regardless of the reason. NOTE: If you submit a permanent Change of Address card, USPS will only forward your mail for up to 12 months. It's your responsibility to update your contact information with anyone who might be sending you important information after that timeframe.
4. Hoping Library Fines Will Magically Disappear
   
   While most library fines are less than 20 cents a day and are capped at the book's replacement cost, ignoring fines can be a big deal. Libraries around the country have contracted with collection agencies to recoup the funds paid each year to replace unreturned books and other materials.
   
   Once your fine is sent to a collection agency, you'll likely owe multiple times the cost of the original fine. You can quickly pay the unpaid fine and collection fee, but the damage to your credit can stay on your credit report for up to seven years. 
5. Improperly Closing Accounts
   
   When you close out an account that has detailed cancellation procedures, like a gym membership, follow up until you receive confirmation that the account is closed. Such accounts typically require written notification of cancellation. If you stop paying before the cancellation is processed, nonpayment may be reported to a collection agency and can negatively affect your credit score. So, review the cancellation policies and procedures before you stop making payments on any account.

There's no need to wake up in a cold sweat over your credit decisions. It’s a good idea to regularly monitor your credit reports and care for your current accounts. These simple steps could help you avoid any surprises.