4 Rotten Eggs That May Be Hidden in Your Credit Report


Image source: Getty Images

Is your credit file full of rotten eggs? Finding them might not be as fun as an Easter egg hunt, but it can pay off big – and we’ll help you find them. Image source: Getty Images.

If you’re a parent, then you’ve probably hidden colorful, candy-filled eggs for your kids this Easter (or maybe you’re going the old-school way of hard-boiling and dying your eggs). An Easter egg hunt is a fun tradition on this fabulous Sunday holiday – but of course you want all the eggs to be filled with a sweet surprise.

While Easter surprises can be a lot of fun, surprises on your credit report are another story, especially if your report contains some of the following rotten eggs.

1. Surprisingly high credit card balances

Every child learns the lesson at least once that gorging on sweets and chocolate bunnies leads to stomach aches. (Right? I wasn’t the only one?)

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Well, gorging on credit and building up a high balance is also bad. This could hurt your credit utilization rate, which is the percentage of your available credit that you’ve used. If you want a high credit score, you need to keep it below 30%.

If you keep this ratio low and diligently pay off your card each month, it may shock you to find that your credit report shows a high balance anyway. This can happen if your credit issuer hasn’t yet reported your new balance, which they only do once a month.

If you charge $5,000 of household expenses to your card each month and pay the bill on the 11th, but your creditor declares your $5,000 balance on the 9th, it will still look like you owe a lot. The only way to avoid this is to pay off the balance before the date your creditor shows up. Your lender can tell you the date of their report if you ask, or you can try making payments on different days and find the best day by trial and error.

2. Installment loans disguised as revolving loans

When you got that motorcycle loan or borrowed for your living room couch, you probably thought the debt would be reported as an installment loan that you pay off on a fixed schedule. Unfortunately, it’s common for motorcycle loans, scooter loans, and store-financed purchases to be reported as revolving unsecured debt – similar to credit card debt.

This can have unexpected negative effects, such as making your credit utilization rate very high at the start of the repayment period. If you find that your loan is reported this way, your best option may be to pay off the balance as soon as possible or take out a new personal loan to pay off existing debt.

When you pay off that debt with a new personal loan that correctly shows up as an installment loan, you not only solve your usage problem, but you also get a new type of debt on your credit report. This can lead to a boost in your credit score because just like you want more than one type of candy in your Easter basket, lenders like to see that you can be responsible for all types of loans.

3. Difficult requests you didn’t expect

You probably know that when you apply for a loan or a credit card, you get a serious investigation into your credit report. But you might be surprised to find that there have been inquiries from unexpected sources, such as car rental companies, cable TV or cell phone providers, or utility companies.

Unfortunately, having too many inquiries on your credit report is just as bad as having too many black or white candies in the bag (who eats those flavors anyway?). When you have a bunch of inquiries in a short period of time, your credit score takes a hit, as multiple credit inquiries can suggest that you’re close to paying off more debt than you can handle.

It is often possible to avoid these difficult questions if you ask. Your utility company may be willing to let you make a cash deposit instead of a credit check, or you can put your rental car on a credit card so the agency can block your card instead. to check your credit. It is especially important to avoid unnecessary inquiries if you will soon be taking out a large loan, such as a mortgage.

4. Unexpected unpaid accounts

Did you know that rabbits have excellent memories? This must be how the Easter Bunny knows every child’s favorite candy. Unfortunately, even the best of us humans can forget things, like unreturned library books or unpaid bills.

Even small charges, such as unpaid fines or parking tickets, can end up showing up on your credit report as arrears if turned over to a collection agency. And a payment default can cause serious damage to your credit. If you end up with an unpaid account that you didn’t know existed, call the company you owe and ask if they’ll remove the negative information from your credit history, as long as you pay what’s owed.

And to avoid this problem in the future, set yourself reminders on your cell phone calendar.

Uproot rotten eggs from your credit report

You don’t want your credit score to stink, so it’s imperative that you check your credit report regularly and root out the rotten eggs. You can view each credit bureau’s report once a year for free at AnnualCreditReport.com.

While it’s not as fun as an Easter egg hunt, the rewards you get will be far greater. With better credit, your loans will cost less, and you can invest some of that extra money into buying even more Peeps and chocolate next year – and maybe reach bigger financial goals too!

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