7 Surprising Things That Can Affect Your Credit

Utility Bills

If you're behind on your utility payments, you risk having your utilities turned off, and you may also get dinged on your credit score. Utility companies typically don't report your payments to the credit bureaus, but if you're so far behind that the utility company has charged off your account or sent it to collections, that can show up on your credit report and get factored into your scores.

Because your payment history is the most important factor in your credit scores, it's crucial that you pay all of your bills on time, including utility bills.

Historically, on-time utility payments haven't been included in your FICO^® Score^Θ, so the only way utility accounts could affect your credit was negatively. But with Experian Boost^®ø, that's changed. Experian Boost is a free feature that adds your eligible on-time utility, cellphone, streaming service, rent and insurance payments to your Experian credit file, which could help improve your credit scores.

Requests for a Credit Limit Increase

There are several reasons to request a credit limit increase on your credit card. Not only does it give you more spending power, but it can also improve your credit over time by reducing your credit utilization rate.

But applying for a line increase will likely cause your lender to conduct an underwriting process similar to what's done when you first applied for the credit card. This often includes a credit check to determine whether you're eligible, which can result in a hard inquiry on your credit report.

Individual hard inquiries don't do much damage to your credit, and it's unlikely the addition of a hard inquiry will have a noticeable impact on your creditworthiness. According to FICO, each additional inquiry typically knocks fewer than five points off your score. But if you've submitted a lot of credit applications recently, adding another inquiry could have a compounding effect and hurt your credit even more.

Business Credit Cards

Business credit cards can be a great way for new and seasoned business owners to pay for everyday expenses and take advantage of rewards and benefits. But while the card is in your business's name, it may still impact your personal credit.

This is primarily because most business credit card issuers require a personal guarantee when you apply for an account. In other words, if your business can't repay what it owes, you're personally responsible for paying the debt. If you don't, the card issuer may report the delinquency to the consumer credit bureaus, which can hurt your credit.

What's more, some business credit card issuers actually report all of your account activity to the consumer credit bureaus. You may want to check with the card issuer before you apply to see what their policy is.

Cosigned Loans

Cosigning a loan for a loved one is a generous act because it can help them qualify for credit they might not have gotten on their own. But it's important to understand that cosigners aren't just lending their good credit for the application—they're also responsible for paying back the loan if the primary borrower can't.

A cosigned loan will show up on your credit report as though you borrowed the money yourself, and if a payment is missed, it can damage credit scores for both borrowers attached to the loan. Also, having the debt on your credit report could increase your debt-to-income ratio, which can make it difficult for you to get approved for credit when you need it.

Car Leases

A car lease isn't technically a loan, so you might not think it gets reported to the credit bureaus. After all, your apartment lease doesn't always get reported either.

But leasing companies report the account just like a traditional installment account. So it's crucial that you keep up with your payments. Fortunately, lease payments are typically lower than auto loan payments, so it may be easier to afford if your budget is tight.

Having Little Credit Diversity

One thing lenders like to see is that you can successfully manage different types of credit. This means that having a credit card, auto loan, student loans and a mortgage can be better for your credit than just having a couple of credit cards.

This credit mix makes up 10% of your FICO^® Score. According to FICO, it likely won't be a deal breaker for lenders if you don't have tons of diversity with your credit accounts. Nor should you

apply for different types of credit just to boost your credit mix. It's important to weigh the costs of new credit accounts against the benefits. In most cases, it's best to naturally establish a diverse mix of credit over time as you need different forms of financing.

Ignoring Your Credit Report

The simple act of checking your credit report doesn't impact your credit score directly. But if you neglect your credit reports, you could miss something that can wreak havoc on your credit score.

For example, if someone steals your personal information and opens a fraudulent credit account in your name, that account will show up on your credit report. If you don't catch it and the account goes delinquent, it can damage your score.

The same goes for errors on your credit report. While it's uncommon, it is possible for lenders to make a mistake when reporting your account status. In some cases, these errors can have a negative impact on your credit score.

You have the right to dispute information on your credit reports that you believe is inaccurate or fraudulent, but unless you check your credit report regularly, you won't know the potentially damaging items are there.

Track Your Credit Score to Maximize It

Building and maintaining a good credit score can be a lifelong pursuit, and the more proactive you are about developing good credit habits, the easier it will be in the long run. Checking your credit score can help you spot potential issues before they do real damage and also help you understand which actions can help improve it. It's always free to get your Experian credit report and FICO^® Score, updated daily when you sign in.

Experian's free credit monitoring service makes it even easier to stay on top of your credit. You'll be able to track your FICO^® Score progress and get alerts of important changes to your credit report, such as new inquiries and accounts. Keeping track of your score and learning what can and can't hurt it will give you all the information you need to succeed.