CampusRd - college credit report, credit score, credit cards and student loans 312.854.7605 / Join Our Network /
 
 

Credit Score Blog

Get the latest news and opinion pieces through our financial industry blog.
Our writers develop articles on financial matters that affect the everyday lives of all our users.
Credit score and free credit scores
Home > Credit Score > Blog > 3 Not So Friendly Deals That Can Hurt Your Credit Score Credit score and free credit scores

3 Not So Friendly Deals That Can Hurt Your Credit Score

Tuesday Jul 21, 2009

It's those enticing phrases such as, "No interest and no payments for 6 months" or "Get 10% off your purchase when you open a store credit card", that always tempt our wallets. When these "deals" are put in front of us, it makes it seem like we will be getting the deal of the century. We are made to feel if we pass these deals up, we will regret it for the rest of our lives. As your source for important credit score details, I am here to inform you that these deals are not as wonderful as they first appear. In fact, I provide all of my truth seeking readers with 3 deals that are sure to destroy your credit score. You're welcome.

"No interest and no payments" may sound like beautiful music if you are about to engage in a pricey venture. However, let me spell out for you what this actually means. Of course it is a bonus that you don't have to pay for the whole thing up front and you save money on interest rates, but these deals can have serious damage on your credit utilization score. Your credit utilization score is essentially the total credit available divided by the total debt amount. Credit utilization makes up 30% of an individuals credit score so it is extremely important to say the least. So for that purchase with "no interest and no payments," the line of credit that is taken out is automatically at 100% utilization rate. Until this line of credit is paid off, the utilization rate will stay this way. Just so you know, a good credit score typically has between 10-30% credit utilization.

As we have talked about before, opening a store credit card (or even student credit cards) is a good way for someone without credit to begin to build a credit score. However, if this need is not there, be careful about the store credit card lure of "saving 10% on your purchase with a new store credit card." First of all, when someone applies for a store credit card, an inquiry is made. This then has the potential to lower your credit score right away. Next, as we have learned in previous blogs, store credit cards have low credit limits and this in turn can increase an individual's credit utilization. Finally, as we all know, store credit cards are likely to carry very high interest rates. Since I have spoken about this before, you all know the consequences of high interest rates. Therefore, deal 2 has proved to be not so enticing either.

You miscalculated your bank account status this month and oops, you accidentally over-drafted. Thank goodness that your bank offers an overdraft reserve account! Not so much. Unfortunately, these overdraft reserve accounts are not as friendly as they appear. Although they do eliminate those stupid overdraft fees, they open a line of credit that must be paid back immediately. If this is not done, your credit score will be hit with a missed payment. This hit to your credit score is much like a missed payment on a credit card and making payments on time is the most heavily weighted factor of an individual's credit score.

Be smart, and don't become a victim of these "deals" that in the end will hurt more than help.


< Previous Next >



Comments


Be the first to add a comment by filling out the form below



Add your comments...


 
Name
 Required

Email
 Required, will not be published

Comments
  Comments are moderated and generally will be posted if they are on-topic and not abusive

Verification `s Enter #`s here


 

Featured Credit Score


Equifax ID Patrol™

Equifax ID Patrol™


myFICO®

myFICO®




Credit Score Blog


How your credit score affects getting home insurance?
Friday Feb 15, 2013

Increasing your credit score can help you with credit agencies
Thursday Nov 15, 2012

View all >



Credit Score Tweets


The people need Education, its the best way to know our rights and keep a good credit score. Watch this video:... http://t.co/OPSNC9Ay
Sunday, November 27, 2011 21:56 PM

#Atlanta: Where can I get a free credit score? http://t.co/CMoZmZFv #FREE
Sunday, November 27, 2011 21:56 PM

 

CampusRd, Credit Rating, Credit Cards, Loans, Credit Score
Call Today (312) 854-7605 
© 2014 CampusRd.com, a business unit of Uloop, Inc  
 
 
Login    
Email Address    
     
Password  (forgot password?)      
     
     
Tell a friend about this offer    
A link to this page will be sent to the
"Destination Email Address" below, in accordance
with our privacy policy and terms of use policies
Your Email Address    
       
Destination Email Address    
       
Verification #'s Enter #'s here
 
       
Forgot your password?    
Email Address