Here’s How One Credit Card Purchase Can Ruin Your Credit Score

In April 2019, Juana Velosa was delighted with her next work assignment in Africa. As part of her job, she would spend three months on the continent.

As she packed her bags and got ready for the trip, she made sure to have a solid checklist in place to make sure she didn’t miss anything. This included making sure all of her bills would be paid in her absence and connecting with her credit card account and paying off the balance in full.

When she finally returned home at the end of July, she quickly returned to her usual routine. A few weeks later, in early August, she went shopping for clothes and when she tried to checkout, her store-branded credit card was declined due to an outstanding balance.

Puzzled, Velosa immediately called the bank for more information. Her first instinct was that she was a victim of fraud. She was told that a purchase she made before her trip was not included in the statement balance she paid (it was included in the following month’s total).

His original purchase was $ 59.68, but it climbed to $ 169.99 due to three late fees and $ 7.31 in finance charges. In order to avoid being charged more fees, she immediately repaid the entire balance, including fees (the bank waived the most recent late fees). Thinking that it was now behind her, she moved on with her life.

It was only recently that the seemingly insignificant unpaid balance of her time in Africa began to haunt her again. She hoped to refinance the mortgage on her house in order to take advantage of lower interest rates. She eagerly applied and was awaiting approval when her loan officer called her with bad news: her application had been denied due to the snafu with her credit while in Africa. Her credit rating had fallen.

What started as a harmless shopping trip in April for $ 59.68 worth of clothes, can now cost her thousands of dollars in interest payments on her mortgage due to her ineligibility for refinancing. Refinancing a mortgage works the same way as refinance student loans, which means that reducing your interest rate by a few points can make a huge difference in the total amount paid over the term of the loan (s).

Velosa is frustrated as she claims that she was never told by the bank about late fees or the unpaid balance, and only found out when she accidentally returned to the same store to make another purchase. in August. If she hadn’t stopped that day, the total balance could easily have reached hundreds of dollars, without her realizing it.

Velosa’s story should serve as a warning to all credit card users, as it’s easy to see how this could happen to anyone. Even a single innocent misstep can have huge financial consequences.

Here are some steps you can take to prevent something similar from happening to you and ruining your credit.

1. Regularly check your credit report

You can get your official credit report for free at By law, each of the three major credit bureaus (Equifax, Experian, and Transunion) must provide you with a free credit report every 12 months if you request it. I request one from a different credit bureau every three to four months throughout the year.

The most important things you should look for in your report are derogatory marks, accounts you don’t recognize, or any inaccuracies. Making sure your credit report is accurate will go a long way in detecting fraud and quickly catching any missed payments.

(Read: 8 things you can learn from those with perfect credit scores)

In addition to getting a free credit report, you can also get free credit scores. Sites and companies like Credit Karma,,, Mint, and Chase Credit Journey will all give you free scores. Some of these are estimates using their own models, but I have found them to be very accurate. I have been using Credit Karma for years and recently started using Chase Credit Journey. They are all doing a good job.

You should never have to pay for a credit report or a credit score. You can freeze your credit for free too.

2. Automate your payments

One way to avoid missed payments is to remove the human element by setting up automatic payments. You will still need to make sure that your payment account has enough money to cover the full balance so that you don’t go overdraft.

Automatic payments will help you avoid late fees and unwanted interest charges which, as we’ve seen in the case of Velosa, can quickly get out of hand.

Even as a personal finance writer I sometimes forgot to pay a utility bill on time, so a few years ago I started automating as many payments as possible. From utilities to credit cards and even rent. This means I spend less time doing repetitive tasks each month and never miss a payment. So I have a credit score over 800.

It is also important to remember that your credit score is not the most important thing when it comes to your personal finances.

As for Velosa, it remains to be seen whether his credit card company will heed his request to remove negative remarks from his report. Her mortgage refinance is on the line. Her plan for the money she hoped to save in mortgage interest? Increase his retirement savings by maximizing his IRA.

About Scott Conley

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