3 Unexpected Things That Can Hurt Your CreditHaving good credit scores can prove to be difficult for many of us, but luckily, there are well-defined steps for building credit from scratch and maintaining good credit. Sometimes, however, the rules for managing credit can feel counterintuitive and downright weird. Although you can’t completely prepare for every scenario that will affect your credit, it does help to familiarize yourself with situations that can emerge from common occurrences. Below, we briefly discuss some unexpected instances that might hurt your credit more than you’d expect.

Avoiding credit altogether

Whether you’re working to break a cycle of credit card debt or you no longer want to use credit, neglecting your credit card might do more harm than good. This is because inactivity doesn’t look very good to lenders and credit card companies. Additionally, some card issuers actually reserve the right to close inactive accounts, which will definitely result in a substantive decrease in your credit scores. That’s because your credit utilization ratio, or your debt-to-credit ratio, will take a huge hit since you won’t have as much available credit anymore. While there’s no need to stack on debt for the sake of credit building, you should at least try to make one purchase a month with your card. For example, you can use your credit card to pay your monthly bills, then pay off the card in full every month. Doing this has a number of perks, including keeping your credit cards open and active.

Vendor disputes

Sometimes when a consumer exercises their right to cancel credit card charges (after being misbilled or receiving a defective product), the vendor who was to receive the funds might still expect payment, even if the charges were successfully disputed with the credit card issuer. In some cases, this issue escalates due to a breakdown in communication. In such instances, customers may be contacted out of the blue by a collections agency who began collecting on the disputed charge. This often happens because a dispute, which is successful in the eyes of your credit card issuer, isn’t necessarily seen the same way in the eyes of the vendor or merchant. Unless the vendor or merchant actually agrees to rescind the charge on their side, you could, unfortunately, still be on the hook for the expense.

Such a situation can be very stressful, as some consumers have learned. Sadly, if you want to save your credit, aside from a legal battle, you only have a handful of options. If you have good documentation around the incident and you catch the charge before it’s sent to collections, you can try to settle the issue with the vendor directly. Otherwise, you’ll likely have to talk to a collection agency, and in the worst case, you may agree to pay a fraction of the charge to prevent it from being reported to the credit bureaus. Though such a situation is far from ideal, the alternative (allowing the debt to stay in collections) is unfortunately much worse, as it can seriously damage your credit.

Unpaid fees (no matter how small)

It’s no shocker that unpaid bills will likely end up in the hands of a collection agency, especially if you miss a credit card payment, but did you know that charges as small as library fees and parking violations can be sent to collections, as well? This is why it is important to keep track of any outstanding fines and to pay attention to any mail you receive, as collections agencies often contact consumers via mail.

Staying in the know with your credit isn’t always easy. For more information about building and managing your credit, keep reading our credit monitoring blog.