Understanding how to maintain your credit isn't exactly rocket science. Many of us know the basics: pay all of your bills on time, don't max out your credit cards, don't apply for a lot of credit, etc. But did you know there are less obvious, and even strange, ways to damage your credit?
Well, they exist. Here are a few:
1) This may not be that strange to you, but the concept seems to be. Over the years, you've collected quite a few credit cards - one for your favorite department store, one that you opened because your bank offered a $50 promotion at the time, and maybe another that you opened when you got that new TV. Today, you no longer live near the department store you loved so much, and your TV is in working order, so you won't be buying a new one soon. The logical thing is to get rid of those old credit cards, right? Well, not exactly. When you close a credit card, your credit limit decreases. It's even worse if you close out an older card - just keep that in mind!
2) The days of owing a few bucks in late fees on overdue books are over in some areas. Libraries have started to crack down on "book perpetrators," as many local budgets are in a pinch to fund important community services. As a result, libraries have been known to send even the smallest debts to collections agencies.
3) Remember that dreaded speed ticket? Well, it's more than just a ticket, it's a debt to the county, and they aren't exactly laid back about gathering what they're owed. Ignored tickets will almost always be sent to collections, causing your credit score to take a hit.
4) Despite it being counterintuitive that a person be punished for paying off debt, it does happen. For example, let's say you're attempting to wipe debt from your record and you cough up 75% of the amount owed. That remaining 25% will still hurt you because it's considered a new charge-off on your credit report. It IS possible to dodge this by negotiating with your debt holder, so explore that option if you're ever in this position.
Pretty weird, huh?