There are financial missteps you can make that are guaranteed to lower your credit score. One of the biggest factors in determining your credit score is your past payment history, but there are other things you may be doing that can affect your score in a negative way.
- A first missed payment. Per a FICO study, a single 30-day late payment can cause a good credit score of 780 to fall 90 to 110 points. An average score of 680, can fall by 60 to 80 points. You can avoid missing payments by setting up auto-pay from a linked checking account every month. If auto pay makes you uneasy, you can set up automatic alerts that will remind you when your bill is due.
- A maxed out credit card. Credit utilization is the second most important factor of credit scores, so reaching your card’s credit limit can be problematic. What’s worse, is if you have multiple cards you are doing this with. Remember, for optimal credit score results, it is recommended you keep the amount of debt you owe collectively and on individual cards below 30%, and ideally 10% of your credit limit.
- An error. This happens more often than you might think. A report from the Federal Trade Commission discovered that one in five Americans had an error on their credit reports. Staying on top of your credit score and monitoring it for mistakes can help.
- An account in collections. That medical bill you thought insurance covered or a utility bill you forgot to pay in college can drop your score 50 to 100 points (if it winds up on your credit report). That account can legally stay there for up to seven years, plus 180 days from the date of your first missed payment. Keep an eye on your mail for any outstanding debts and resist the urge to ignore a call from a debt collector.
- Applying for several credit cards or loans at a time. These credit inquiries account for 10% of your credit score. Keep credit applications to a minimum. Making several requests in a short period of time can cause your credit score to dip.
- Closing out your old credit cards. Another component of your credit score, 15%, is the length of your credit history. Closing old credit cards, especially your oldest card, makes your credit history seem shorter than it really is.
If you are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.
Related Resources:
http://finance.yahoo.com/news/5-big-credit-score-killers-110000016.html
https://www.thebalance.com/things-that-hurt-credit-score-960510