What are Factors that Damage Credit Score?

Factors That Damage Your Credit Scores

People should take caution by avoiding ways to damage their credit scores. In determining interest rates, your credit score reputation is the most important factor to protect. The better your reputation is, the more benefit you will receive when paying a loan. It’s beneficial because you will be paying less interest on loans, resulting in saving thousands of dollars on interest payments.  The following factors could damage your credit score and you should try to avoid them:

Maxed-out credit cards

If your credit cards are maxed out, credit agencies and lenders will assume that you have an excessive amount of debt.


Unemployment (review this plz)

Receiving unemployment benefits will affect your credit score so try to reduce the time period of receiving benefits. Credit bureaus will notice the reduction in your income despite being unaware of your unemployment. This will possibly affect the way you pay off your debt on time and will damage your credit scores.


Too Many Credit Requests (this too)

When applying to more than one credit line, avoid applying in a short time span. Opening credit cards and creating loans in a short period of time will drop your credit scores. You should also be avoid having multiple requests on one type of credit in the time period, as it counts for one inquiry. It will send a red flag to credit bureaus by showing that you may be having financial troubles.


Closing Cards with Remaining Balances

Closing a card with a remaining balance will negatively affect your credit score. Closing a credit line will also remove a chuck of credit that is given to you. Why is that? Part of your credit score is determined by the overall credit extended to you. Closing it will reduce and damage your score, and also cause an increase in your debt-to-credit ratio.


Private/Government Liens

Your credit score will pay the price if you have a lien on any type of property. Liens will be recorded on your credit report for 7-10 years but once it’s paid off, your credit score will improve. One way to remove the lien, if the federal or state government does not enforce it, is to request credit bureaus to have it taken off.


Bad debt-to-credit ratio

Your debt-to-credit ratio is the measure of your total balance from all your credit lines contra to your overall credit limit. You should always regulate your balance to keep it low as possible. Having a sudden spike will cause a drop in your score especially if you do not have a extended new credit line. It is recommended to manage 50% at most ratio for each of your credit lines.


Late Payments

Paying bills is the largest contributing factor towards your credit score, as it is responsible for 35% of how the credit bureaus calculate your scores. Making it a habit to pay your bills late will be damaging to your credit scores. Not only will your score suffer, creditors may charge late fees or raise your interest rate. Then you will be left charged with two options: late fee payments, and marked-up interest rates on future loans.


Blowing off your bills

Anyone can take the easy way out by completely blowing off his/her bills, but the consequences on the credit scores will be very damaging. Not only will the individual be bombarded by displeased lenders, but the person’s credit score will be stripped down and blacklisted for up to seven years.


Collection notices

Collection notices can be very damaging to your credit score as well. Creditors sends collection notices as their final way to get a hold of any debt that you owe to them. It is a signal that they are impatient and has contacted a collection agency to at least get a piece of their money back.



Bankruptcy is an obvious sign to credit bureus that you are in a deep hole of debt, yet is unable to clear the debt with lenders. Bankruptcy will cause a major impact on your credit scores due to the fact that any credit bureau will be able to see the damage on your credit reports for ten years.


Neglecting to check your credit report

Not paying attention to your credit report may also ruin your credit scores. There may be mistakes that credit report agencies have done, which will cost you thousands of dollars if you are not aware and review your reports. It is strongly advised to review your credit reports once a year.

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