Can you accidentally damage your credit file?
Find out what actions can hurt your credit score without you even realising it.
While it's obvious that some activities will hurt your credit score – defaulting on a personal loan or declaring bankruptcy – other problems are not so obvious. You might check your credit score and find yourself in the "very good" credit score range, only to drop to a lower range for seemingly no reason whatsoever. However, there are a number of issues that can affect your credit score and your credit file that you may not be aware of.
When you move house several things happen that can affect the health of your credit file. You may not forward all of your mail which could result in a default turning into a serious credit infringement. This is where a lender is unable to reach you for a period of six months or more following a defaulted payment. You may not even be aware of the default in the first place because credit providers can contact you by mail to let you know about it. Unless you pay the outstanding amount in full the infringement remains on your file for seven years. If you do move house, make sure all of your creditors and financial institutions have your new address and can contact you. You can also consider leaving a forwarding address with the people moving into your house or set up credit alerts to keep an eye on your file.
Enquiring about credit
Every time you enquire about a loan, credit card or any type of credit accounts they will be listed on your credit file. If you make too many enquiries in a short space of time this can have a very negative impact on your credit file and subsequently, your credit score. Before you make enquiries with a lender find out whether they will be checking your credit file as part of the process. This is where the enquiry is listed. It's important to compare your options, but you can do so without making formal applications for credit. Only apply if you're looking to actually take on the credit account.
Not managing your automated payments
Automated payments from your debit or credit card can be convenient and help you manage your bills and credit accounts more easily. However, if your cards expire or get stolen and need replacing, it's important to remember to recreate the automated payments to avoid late or missed payments. Any payments that are late or missed can be noted on your credit file and affect your credit reputation.
Paying a utility bill late
People often misunderstand the effect utility accounts can have on their credit files. If you have a utility account that is more than 60 days overdue and you owe more than $150, it can be listed on your account as a default. The provider will need to send you two separate notices before it can legally list the default.