10 Behaviors That Hurt Your Credit Score

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As a Certified Non-Profit Consumer Credit Counselor I can tell you that most people have no idea what they are doing when it comes to credit. Sure most people know the important stuff; pay your bills on time and don’t go over the limit, but the rest… Well let’s just say there’s a lot of misinformation out there. So the two biggest parts of your score: Payment History & Amounts Owed on Revolving Accounts. A revolving account is a credit card, as in not your mortgage, auto, student loans, or finance companies. Anyway, Payment history is 35% of your score. Make at least your minimum payment on time and your payment history will be golden. But again, although it is the largest part, it is just that, only part of the equation. Amounts owed on revolving accounts makes up another 30% of your score. We all know, or at least most of us that you shouldn’t go over your limits, but how high is too high? It depends actually. A high amount of debt is relative, for some people $200k is an average Christmas, for the rest of us not so much. If you own a mortgage then your score will not suffer until you reach about 40-50% of your available credit. Ideally you should sit around <30% for it to be positive. If you do not own a mortgage your score will suffer once you hit about 30-40% of your limit and should keep your balances <20% for a positive rating. Oh and only use one card at a time. We conduct financial reviews for free, (that’s the non-profit part) we will assess your situation, and get you moving in the right direction. www.ClearPointCCS.org Just schedule an appointment. Thanks

David of CA 5:28PM June 09, 2010

Long ago I buried myself under way too many credit cards & used them for nice (unnecessary) purchases, creating massive debt I couldn't pay. Losing two jobs through no fault of my own (layoffs) at once finished me off, after I used up all my savings, taking out debt consolidation loans (promptly ran the cards back up again), borrowed against my life insurance, etc. I created my own financial purgatory, dogged by creditors/garnishments/courts at every turn 'til I could'nt check my mail w/out finding what eventually became boxes & bags of computer-generated letters, could'nt answer my phone I was being dunned by so many collectors (I finally had it disconnected for the sake of my sanity and peace of mind), even had them coming to the door. Food, heat became luxuries! I finally resorted to debt reschedulement (Chapt. 13) to even begin to straighten things out. Years later, after restructuring my fiscal outlook, getting rid of the cards for a few years, getting a new employer, etc. I was able to climb back out of the seemingly bottomless pit I was in. I now have a tolerably decent job, one credit card (which is all I want) used only for emergencies or if I travel, and paid off totally right away, a mortgage, etc., even some savings. I am at about the lower-middle-class level fiscally as everyone else right now. OK, not great, but surviving. Better than I was, though. However, after getting credit reports more then once, I have found very little updated, very little accurate on them. Trying to straighten them out, while a good idea, is a long hard row to hoe, as creditors don't update credit reporting bureaus in many cases to remove bad info or paid off debts, credit reporting agencies do not believe you when you say you've paid off debts or when debts expire, drop off, reach statute of limitations, etc. Even when you have stacks of paid reciets, etc., you still go through torture over many months trying to convince agencies you've made good on debts. Best advice, be smart from day #1: 1 credit card, good, 2 maybe, no more than that, DON'T ABUSE THEM! Play credit wisely like chess, or suffer the consequences; I learned my lesson the hard way, & it cost $$$$!
I might add: credit bureaus should be illegal: they haress/lie/ruin people as a national sport. Sure, some debtors are just dead-beats, but some have gotten themselves in over their heads, honestly want to pay, but just simply can't, where paying back overwhelming bills is a nightmare hardship. In those cases, the only safe haven (not totally safe) is recourse to Bankcruptcy (nasty in itself).
Live simpler & streamline your life, don't get in over your head, realize no matter how much you think you make in salary, it is probably never enough with hidden costs/expenses lying right down the road!
Credit cards with their hidden costs, fees, interest etc. are plain usury most don't understand: ignorence of the common people sometimes is an excuse, I fear. Outlaw those cards, too!

"Hard Lesson Learned in Mich." of MI 10:33AM June 09, 2010

Number one way at the top of the list are companies that activity ,knowingly[reporting submitting fraudulent information to the credit agencies. so them and their banking ,insurance bud's can reap the whirlwind -mother load of fees. Credit reporting agency actively knowingly participate/partake[more ways then one] in these known fraudulent claims!.

allday suckers of MD 4:33PM May 25, 2010

If a person is trying to build credit, it can be beneficial to carry a small balance and make monthly payments to establish a credit history. Otherwise, I think most banks would recommend paying balances monthly for people whose credit is already established.

Shaina of AR 6:21AM May 18, 2010

I'm under the impression that keeping a low balance is not a negative like keeping a high balance is. Can you back up the claim that "1. Keeping a small balance..." is damaging to a FICO credit score?

William Whitener of TX 1:32PM May 17, 2010

You are mistaken.
The idea is that you USE a portion of your available credit, paying off the balance in full monthly. That is not the same thing as "KEEPING a low balance" (defined as never paying your bill in full and thus accruing interest charges).

TIA of TN 12:32PM May 17, 2010

Keeping a low balnce on your credit cards does not harm your credit. In fact, maintaing a balnce of 10% of available limit will help your score. Not using credit cards can cause them to be unrated and could potentionally have a negative impact on credit scores.

Victoria Finch of IN 7:53PM May 11, 2010