5 Credit Score Killers

There are endless ways to damage your credit scores these days and I think I have personally seem nearly all of them. However, some of the factors that negatively affect your credit scores may surprise you.

David Ellis at CNNMoney.com writes about five such ways with only the first one being the obvious no-brainier:

"Late payments:
The easiest way to lower your credit score is through delinquent payments or by skipping out on a bill altogether. Since your payment history makes up 35 percent of your credit score, failing to make the minimum payment within 30 days of the due date could send your score plummeting, says Craig Watts, a spokesperson for Fair Isaac.
Say for example you've never missed a payment and have a credit score in the high 700s or low 800s. If you were to miss the 30-day grace period, your score could drop by 100 points or more."

"High card balances, low FICO score:
Maxing out your credit cards or pushing your account to its limit is another surefire way to bring down that FICO score, says Watts. Experts say that consumers should aim to keep the balance on their credit card accounts no higher than 35 percent of their credit line. That means if you have $1000 credit limit on your card, try to keep the balance no higher than $350.
'The lower your debt compared to your credit limit, statistics show you are a better credit risk and that you have more self-control,' says Watts.
That also means you might want to reconsider consolidating all of your credit card debt onto one account, especially if that means the new balance is close to your credit limit."


"Closing credit cards:
Ok, ok, we know what you're thinking: 'I've got an unhealthy number of credit cards in my wallet, I think I'll start closing those out to help my credit score.' Not so fast, warns Steven Katz, a spokesperson for TransUnion, one of the country's three major credit reporting agencies.
Since part of your score is based on the length of time certain lines of credit have been open, closing out that 10-year old credit card could take a bite out of your credit score.
'It's negative because it's taking away a reference to a positive credit history,' says Katz."

In addition to the history reference of the credit source it also depletes the amount of credit available to you which also factors into your scores.

"Too many in-store cards:
It's always a temptation at the checkout line, but signing up for a Home Depot, Macy's or any in-store credit card just to get a 10 percent or 15 percent discount may work against your FICO score."

Plus, it's easy to become dependent on such 'niche cards' which can rapidly raise your credit burden.

"Fines that add up:
A $30 library fine or a $75 parking ticket. Who cares, right? Well, that could be changing, says Watts. More often nowadays, municipal governments are turning outstanding fines over to collection agencies, who have the ability to trash your credit rating if you don't pay up. Watts says that if a collection agency reports you were not able to pay that overdue library fees or parking ticket, that could drop your credit rating by 100 points or more.
'That will hammer your score,' says Watts. 'Make good on that bill because you don't know who is or who is not reporting to collection agencies.'"

Additionally, once your debt is turned over to a collection agency the balance will begin to balloon with interest and collection fees. This can be an expensive and frustrating path to follow. If you owe it - pay it. If you dispute it - get an attorney.

If you are considering buying or refinancing a home soon and would like to know The 6 Credit Report Secrets you MUST Know Before Applying For a Mortgage go here.

-Bill Burniece