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Where You Shop Could Hurt Your Credit Score

by Francine Huff

Next time you use a credit card, think about how that purchase could affect your credit score. Even a single purchase could have a negative affect on your credit score. That's because credit card companies may see certain purchases as red flags that indicate you may be having financial problems. It's important to be aware of how your credit card use could harm your credit history even if you make monthly payments on time.

Credit Reports

You credit report provides a snapshot of your spending habits. It also shows when credit card companies and other lenders take action against you, such as turning accounts over to collections. But even if you've never had a creditor take action against you, your lifestyle could work against you.

That doesn't sound fair, but credit card companies and other financial firms are looking at many factors when determining your risk as a customer.

Here are some things you may want to avoid charging on credit cards:

  1. Income tax payments. Charging payments to a tax service could be viewed as a sign that you can't afford your income tax brackets and are having financial troubles.
  2. Purchases at thrift shops and dollar stores. Who doesn't want to find a good bargain? But charging too many items at these and similar retailers doesn't look good. "The fact that you're suddenly shopping at cheaper stores implies you're going to have difficulty paying your bills," Robert Manning, author of Credit Card Nation, told WALB News.
  3. Marriage counseling. You would think getting help to repair a broken marriage would be a good thing. But some credit card companies view marriage counseling as a sign that your marriage may be in deep trouble, which could result in a split and lead to serious financial problems.
  4. Traffic tickets. Getting too many tickets may send the signal that you are reckless and irresponsible. Many folks who've charged traffic tickets ended up defaulting on credit cards, according to American Public Media.
  5. Alcohol and gambling. Credit card companies may view these purchases as indications that you are worried and stressed about money.
  6. Porn and strip clubs. Spending a lot of money in these areas also may be viewed as red flags that you are worried and looking for an escape from your financial woes.

It doesn't matter whether you really are in financial distress or not. Certain purchases are automatically viewed as troublesome and could result in your credit line being cut or even closed, which could depress your credit score.

Published 02/02/11 (Modified 07/09/14)

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