Hello, Dinks. A few months ago I discussed different ways to increase your credit score. Today, I want to go over a few ways that you can ruin your score. Unfortunately, I’ve done a few of those things in the past.
Spend up to your credit limit
The first thing that you can do to ruin your credit score is to spend up to your credit limit. Don’t do it. The amount of debt that you have is 30% of your credit score. That’s nearly a third of it. You want to try and keep your credit utilization ratio under 30%. At one time my debt to credit ratio was at 90%. I was a mess back then. My score was also not that good. I worked at lowering my credit card debt, and I can now say that it is under 50%. I will get it to under 30% in no time.
Paying bills late
Paying your bills late specifically loans or credit cards is one of the quickest ways to ruin your credit. Your payment history accounts for 35% of your credit score. The more late payments that you make, the lower that your credit score will go. Pay your bills on time so that you won’t have this problem.
Having too much credit
Having too much credit can lower your credit score. Lenders will look at that as a red flag. Every time you apply for new credit, the lender makes a hard inquiry on your account. The more inquiries that are made, the more of a chance that you will see a drop in your score. You may also get to the point where you spend a lot of it, thus adding more debt to your debt to credit ratio.
Closing a lot of credit cards at once
The next way to ruin your credit score is too close a lot of credit cards at once. When you close a credit card, you immediately reduce the amount of credit you have available. When your total amount of available credit decreases, so does your credit score. To keep that from happening your best bet is to keep those old cards or close one card per year.
Co-signing a loan
Co-signing a loan is something else that can ruin your credit score. You may think that you are helping a family member or a friend but think again. If their credit were good, they wouldn’t need a co-signer in the first place. Once you co-sign for someone, the loan will show up on your credit report. If that person that you are co-signing with misses payments, it will negatively impact your score. Think long and hard before you co-sign for anybody.
Not checking your credit report
Everyone has the chance to get each of their three credit reports free once a year. It’s good to check them to see where you stand credit wise. You also want to make sure that there aren’t any errors on the report either. If you see something wrong, you should try to get it fixed ASAP.
To recap, the ways that you can ruin your credit score is by spending up to your credit limit, having too much credit, closing a lot of credit cards at once, co-signing a loan and not checking your credit report. I’ve made some of those mistakes before and have learned from them.