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By Ben Luthi / NerdWallet
October 24, 2015

When you’re trying to establish and maintain excellent credit, it’s important to keep an eye on your credit reports. But those reports don’t tell the full story of your finances.

Some less-than-creditworthy moves might not show up on credit reports but could still affect your credit score. Others may not hurt your reports or your scores but could still lead to financial problems later. To avoid such surprises, it’s important to pay attention to all of the ways you deal with loans, credit cards and bank accounts — even if those actions don’t seem related to your credit.

These four moves might not affect your FICO score but can still harm your overall financial health.

1. Making just the minimum payment on your credit card

For credit card accounts, reports typically list your credit limit and your most recent balance and payments, without specifying whether the recent payment is at or above the minimum payment for that card.

But making just the minimum payment can still hurt you.

“While making the minimum payment will not hurt your credit report directly,” says Rod Griffin, director of public education at Experian, “if you only make minimum payments and continue to charge, your balances may increase, which can hurt your credit score because you will be increasing your utilization rate.” The higher your credit utilization ratio, the more your score can drop.

2. Taking out cash advances

On your credit report, cash advances generally are included in your total credit card balance, not listed separately. However, you should exercise caution when using credit cards to get cash.

That’s because credit cards typically charge an upfront fee ranging from 3% to 5% of the amount you receive. That means a $1,000 cash advance on your credit card will generally cost you between $30 and $50. Also, cash advances are usually charged a higher APR than regular purchases. This makes cash advances a costly choice in both the short and the long run. Griffin recommends checking your credit card contract before you take a cash advance.

3. Keeping a negative bank account balance

If your checking account has had a negative balance for a while, the bank may “charge off” the account by closing it and declaring it a bad debt. While this is similar to having your credit card debt charged off, it won’t appear on your credit report. But that doesn’t mean you’re in the clear. “There are other consumer reporting agencies, called debit bureaus, that collect insufficient-fund data,” Griffin says.

If your checking account is charged off, the bank may report this to a debit bureau, usually ChexSystems. You’ll still owe the bank the amount you overdrew, and the resulting negative mark can make it difficult to open another bank account.

4. Co-signing a loan

Before you co-sign on a loan for a family member or friend, keep in mind that you’re not just lending your good name to help someone secure a loan. By signing the application, you become equally responsible for repaying the debt. The loan will show up on your credit report as though you’re the primary applicant, rather than simply specifying that you’re a co-signer.

Co-signing a loan can be dangerous because it ties your credit to that of another person. If the other party misses a payment, your credit takes a hit unless you foot the bill. It also effectively increases your debt load, even if the other party pays on time over the life of the loan. This can make getting a loan difficult if it increases your debt load above lenders’ allowable limits.

The bottom line

By paying attention to factors that can harm your overall credit picture beneath the surface and then acting accordingly, you can achieve or maintain excellent credit — and avoid potential financial surprises later on.

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