Consumer Law

Habits That Destroy Your Credit Score

By M. Stan Herring

Yahoo! Finance has posted an article about common habits that really damage your credit score. Credit scores range from 300 to 850 and the higher your score the better.

One of the easiest ways to destroy your credit score is not to pay your bills. It seems obvious, but one of the most important parts to your credit report is your repayment history. If you don't pay your bills, even the minimum monthly payment, then eventually all the bills you haven't paid in 90+ days will go into collections, dragging your score down even more. Eventually, if you don't pay any credit card bills or mortgage payments, you could get so behind that you have to declare bankruptcy which damages your credit for both the short and long term.

Maxing out all your credit cards, or spending past the limit, also ruins your score. Applying for new cards also affects it. Ten percent of your credit score is based on how many new accounts you've applied for recently. Applying for every credit card you hear about or see will definitely help destroy your credit.

Your credit score will be higher if you have a combination of credit cards, mortgage and car payments, and store accounts. Just having credit cards makes your credit report look bad. Also, assuming your situation is hopeless and making no move to drag yourself out of debt will annihilate your score.

There are some habits that won't impact your credit score. For instance, overdrawing your checking account will be very expensive, but won't impact your score. Receiving unemployment checks or food stamps, getting divorced, or losing your job also won't impact your credit score.

If you have problems with your credit report, such as errors, and have questions or concerns, feel free to contact us through our website or by calling 205-879-2447.

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Full post as published by Alabama Consumer Blog on October 01, 2010 (boomark / email).