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5 mistakes that won't hurt your credit… much

Wednesday, May 4, 2011 at 1:44PM

I have another great guest post for all of you. Charles Tran is a great source of credit information. He is a constant contributor to Carnivals of Personal Finance and does some really important work at Credit Donkey. Enjoy!

We all make mistakes – that’s part of being human. However, when it comes to your credit, there are some mistakes that could hurt your credit more than others. Failing to pay your credit card bill on time for example is probably going to hurt your credit, even if you’re only a week or two late. Failing to pay back a loan from your good friend on time probably won’t be as problematic though.

Here are five more mistakes that you may make which probably won’t hurt your credit all that much. As with everything though, you do need to keep things in perspective. None of these should be a habit and of course, nothing here is 100% guaranteed. It’s just a matter of playing the odds.

Bouncing Checks

Bouncing checks against your checking account will cost you a lot of money and may cause problems with getting a new checking account in the future, however it shouldn’t have any effect on your credit unless you bounce checks to your credit card issuer. The reason is simple – banks report to Chex Systems whereas credit card companies report to credit agencies such as Equifax and TransUnion. Chex Systems is however looked at by banks when you open a new bank account so you could have problems with bank accounts, though not credit cards.

Not Paying Your Student Loans

This only works if you arrange for a deferral first. As long as you make official arrangements to defer your student loans with the bank, they won’t report any negative activity to the credit reporting agencies. After all, it’s part of their agreement with you. Of course, this isn’t really so much a credit mistake as something which may just feel a little “wrong,” but it’s really not wrong at all.

Not Paying Your Bills On Time

Not all of them though. You can usually get away with paying the electric bill a few days late without incurring anything beyond a small fine from the electric company. Ditto the gas bill and possibly even the cable bill. However you do need to be careful about paying the credit card bills and the cellular phone bills on time.

The reason is simple – utilities don’t usually rush to report you to the credit reporting agencies when you fail to pay them on time. They’ll usually give you a bit of leeway to make payments and then let you simply pay a fine for being late.

Having No Savings

Most financial gurus will tell you that it’s a good idea to have a financial safety net – some cash on hand to make sure you can get through the tough times and pay for the inevitable surprises of life. Unfortunately, that’s not always easy for some people to do. For some of us, just earning enough to pay the bills is a struggle. Fortunately, credit reporting agencies don’t check your personal savings accounts to see if you have money in them, so you shouldn’t have a problem with your credit score from this.

Switching Jobs

There was a time when those who switched jobs constantly were considered a bad credit risk. Those days however are long gone. Besides the fact that your credit score is completely unaffected by your employment history, credit card issuers know that the world has changed and that people often change jobs frequently, so it’s less of a factor when considering whether to extend credit to you.

Bottom Line

Remember that these are all things that won’t hurt your credit (much). That last word is important though since these should always be treated as rules of thumb. It is for instance theoretically possible that the electric company could report you for being a day late – there’s nothing to stop them from doing it. It’s just that it’s generally not done and as such it’s something that you can usually get away with, as long as you keep it within reason.

Nunzio's Thoughts: It's kind of like a diet. You can eat right and supplement with stuff like HCG Drops to stay healthy. But if you get too carried away with sweets and junk food and stop doing all the habits that keep you healthy then your waistline will start to lose out. Now cheating everyonce and a while is ok - cheat days are important in heavy dieting - but overall you should just strive to lead a healthier lifstyle...and credit health.

Charles Tran, the research director of the credit card comparison website, CreditDonkey, says "be a smart donkey, use CreditDonkey". Remember, credit is the key to your financial success. Send an e-mail to charles@creditdonkey.com

Nunzio Bruno |

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Reader Comments (6)

All your points are right. Bouncing checks against your checking account will really cost you a lot of money and may cause difficulty with getting a new checking account in the future.

May 18, 2011 |

No credit check loans

All your points are right. Bouncing checks against your checking account will really cost you a lot of money and may cause difficulty with getting a new checking account in the future. No credit check loans

May 18, 2011 |

No cred

The points that you have discussed is quite useful. Bouncing checks against your checking account will really cost you a lot of money and may cause problems with getting a new checking account in the future.

June 30, 2011 |

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