Questions and Answers on Things That Might Hurt Credit Scores

A solid credit score makes lenders feel confident about your ability to pay back a loan. Building a good score takes time, but just a few missteps can knock it down. Still, some things that might seem to be bad for your score can actually help it grow, so learn the difference before you make a move.

Does Getting Prequalified for a Mortgage Multiple Times Hurt a Credit Score?

Getting several preapprovals won't hurt your score as long as you get them all within a short amount of time. Lenders pull your credit report when you apply for a mortgage, which counts as a hard inquiry. Hard inquiries can lower your score a few points, but MyFICO says credit bureaus count multiple inquiries for mortgages as only one when they show up within a typical rate shopping period. Under old versions of FICO's scoring formula, the rate shopping period is 14 days, while newer versions have extended it to 45 days.

Does Overdraft From Savings Hurt Credit Score?

Overdrawing your savings account can't hurt you unless you don't pay back the balance. Credit reports don't include information about checking or savings accounts. If you leave a shortage in your account long enough, however, your bank may send the account to collections. Collections accounts do show up on your credit report, and they can make your score take a serious dive. According to Experian, collections accounts can dent your credit score almost as much as bankruptcy.

Does Deferment Hurt Your Credit Score?

Loan deferment doesn't hurt your credit score. When loans are deferred, they show up on your credit report, but the bureaus don't label the accounts as delinquent. However, the balance of deferred loans still counts toward your total debt, which can affect your score. Furthermore, high loan balances raise your debt-to-income ratio, which may stop you from qualifying for a mortgage or car loan.

Does Getting a Credit Card Hurt Your Score?

Applying for a card adds a hard inquiry to your credit report and dings your credit score, but qualifying for the card can actually raise your score. According to MyFICO, 30 percent of your credit score depends on the ratio of debt to available credit. If you get a credit card, your available credit increases, which improves your score. However, be careful with your new card. Any balance you carry adds to your overall debt. If your debt-to-credit ratio gets too high, your credit score falls.

Does Breaking a Certificate of Deposit Hurt a Credit Score?

Breaking that CD early may earn you a penalty from the bank, but it won't hurt your credit score. According to Experian, the credit bureaus don't care about CDs, money market accounts or any other bank accounts. Credit bureaus also ignore investment products such as retirement accounts, stocks and bonds.

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