7 Credit Score Destroyers

Your credit score not only determines whether or not you can  get credit cards, cell phones, utilities, a rental apartment, auto loan, auto insurance and even job security clearance or the job itself and a mortgage to buy a home, it’s also a critical factor in determining the interest rates you have attached to all those items. 

A low credit score can cost you a lot of money over your lifetime.

Not everyone is aware of the many factors that determine a credit score. It’s easy to make assumptions that seem logical but are actually false. Acting on incorrect information is a sure way to make critical mistakes.

Save yourself money and make your financial life easier by avoiding these seven credit destroyers:

 1.     Carrying a big balance on your credit cards. While having a lot of debt is never a good idea, using more than 30% of the available credit on your credit cards hurts your credit score.

• For example, if your credit limit is $10,000, your score drops if your balance is over $3,000. This is commonly referred to as the “utilization ratio.” Keep your credit utilization to no higher than 30% of your available credit limit.

2.     Paying late is a huge factor in your credit score. Experts estimate that 35% of your credit score is determined by your payment history. Any late payments will lower your score.

3.     Closing credit cards is a credit score killer. This is related to your utilization ratio. By closing a credit card, you lower the amount of credit that’s available to you because your credit score is also sensitive to the length of your credit history.

4.     Defaulting is an obvious credit score mistake. When you fail to pay back a loan you owe to a lender, you can lose as much as 100 points from your credit score. Make every effort to pay back your loans and to do it on time.

• If you’re struggling making loan payments, no matter the type of loan, contact the lender and try to negotiate other payment arrangements. They can be very flexible if failing to do so means not getting their payments at all.

5.     Applying for too much credit. Everyone needs to have some credit but applying for too much credit does have a negative impact on your score.

• Each time you apply for more credit, your potential lender makes an inquiry of your credit history. 

• Each one of those inquiries lowers your credit score.

• Avoid accepting every credit card offer that shows up in your mailbox.

6.     Not having a credit card at all. Many people are getting rid of their credit cards in an effort to avoid debt. Unfortunately, this does nothing to help your credit score.

• Experts believe that the ideal credit score includes 2-3 credit cards. 

• Credit diversity can account for as much as 10% of your credit score.  

• Credit cards help to keep your credit history current. 

7.     Co-signing a lease or a loan for someone else can be a huge mistake because if they fail to make on time payments can destroy your credit score.

• When you co-sign a loan or lease you are equally responsible for that debt, so any late payments, defaults or even repossesions will show up on your own credit report as if they were yours.

• You can even be subject to collections and lawsuits. If a lender won’t do business with them, you might want to reconsider before co-signing.

By avoiding these common mistakes, you can protect your credit score and a good credit score guarantees you the lowest interest rates. And don't worry even if your credit score is poor now it is possible to repair your credit and boost your credit score with a good DIY credit repair system. 

Give your credit score the amount of attention it deserves. It makes life a lot easier! If you or someone you know would like more information about MyCreditSystem click on the link. 

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