The suits at Fair Isaac Corporation sure are good at what they do. How else can you explain the meteoric rise in importance of the lowly credit score? It's not just any credit score, either. The FICO credit score stands head and shoulders above the competition by a wide margin. In fact, all non-FICO scores are pejoratively referred to as FAKO scores since, while "valid," carry little weight with creditors.
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So what if you wanted to fight the system and trash your credit score? What if you wanted to bite your thumb at the people who think your entire life, your value to society, and everything you're worth should be tied to a three-digit number? Fortunately trashing your score is actually quite easy.
Stop making payments on your credit cards. Don't pay them late, simply do not pay them. 35 percent of your FICO credit score is based on your payment history. Your credit score is a reflection of how likely you are to default on your debts. The easiest way to show you're a huge risk is if you stop making payments to your existing obligations. If you can't pay your current debts, you stand no chance of paying any new ones, so your credit score has no place to go but down!
If you really want to make it hurt, stop paying entirely and let it go into collections. Your score will suffer with each passing month and having an account go to collections will certainly put it out of its misery.
Apply for a Dozen Credit Cards
Whenever you apply for credit, whether it's a mortgage loan or a credit card, the lender will make a hard inquiry on your report. Hard inquiries lower your score and too many hard inquiries are an indication that you're a credit risk. It's the old adage - the bank will only give you money if you don't need it. If you have a lot of recent hard inquiries, lenders start to wonder why and the credit score formulas reflect this sentiment by lowering your score for each hard inquiry. Besides not paying your debt, applying for a lot of credit very quickly can have a disastrous effect on your score.
Don't Review Your Report
Experts will tell you that one of the most important things you can do to combat identity theft and keep your score up is review your credit reports regularly. The Fair Credit Reporting Act requires the three bureaus to give you access to your report once every twelve months, so don't take advantage of it if you want to sink your score! Let the errors persist, don't fix the problems, and let someone steal your identity and run free with your credit. If you fix those problems, it'll be much harder to keep that score low.
Run Up Large Balances
Credit utilization is another important metric in the credit score formula. It's a measure of how much of your existing credit you are currently using. Take your total balances on your cards at statement closing and divide by your total credit limit across all cards, that number is your credit utilization. Experts warn that you should keep that under double digits, but savvy credit score killers know that it's far more fun to run up a debt and get that utilization solidly in the double digits. If 10% utilization is bad, 20% has to be worse. If 20% is worse, 50% has to be miserable.
If you don't want to run up a large balance, you can try to reduce your total credit limit by canceling credit cards or asking for a credit limit reduction.
If all else fails, or your score just simply isn't terrible enough for you, declare bankruptcy. Declaring bankruptcy is actually much harder than it used to be but if you're able to navigate through the system of debt specialists, declaring bankruptcy will surely trash your score for years to come.
I hope you've all recognized that this is a joke and that you should do the exact opposite of everything you've read. Your credit score has become very important in daily life and sinking your credit score will make life much harder on you in ways you never anticipated. A future employer may use your credit score as part of their hiring decision or a landlord may balk at renting to you because you have difficult proving you can pay the rent on time.
It's an imperfect system but it's the one we have. We still use miles and pounds, rather than kilometers and kilograms, and the credit score is here to stay.
Jim Wang writes about personal finance at Bargaineering.com.