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7 Credit Score Killers

By Janet Lacey
Published: Sunday, September 20th, 2009

Your credit score is the magical number that makes lenders and creditors decide whether they should give you money or not, and if yes, then what terms they should give it to you on. Having a good credit score nowadays is as important as being a good law abiding citizen or having a regular income. Your credit score is affected by a number of factors, and while positive variables bring up your credit score, there are a number of negative items that can greatly pull it down. 

The 7 Major Credit Score Killers That You Need To Avoid Are: 

  1. Late Payments: Your credit report provides details about all your credit accounts. This includes the time when you paid your installments or credit card bills. Late pays are not just clearly listed out in your credit report, but they have the maximum weight (35%) when it comes to calculating your credit score.  
  2. Defaulting On Payments: Defaulting on your payments is even worse than late pays and brings down your credit score drastically because it is an indicator of a person not being a good credit bet. Apart from this, non payments get you closer to a charge off, which can badly scar your credit report. 
  3. Maxing Out Your Credit Limit: Your debt to credit limit ratio forms 30% of your credit score. The more your debt to credit ratio, the lower will be your credit score. Therefore, maxing out your credit cards can considerably lower your credit limits while a ratio of less than 50% can favorably alter your credit score. 
  4. Closing Old Credit Accounts: Canceling old credit cards , especially the initial ones, cut short your credit history. A credit history over a period of ten years carries more weight than a credit history of just five years. The length of your credit history has a weight of 15% when calculating your credit score, and should therefore be kept to a max.  
  5. Charge Offs: Consistent non-payment on an account makes a creditor charge off an account and report it as a loss to insurance agencies. Needless to say, a direct loss to your creditor will negatively affect your credit score big time.  
  6. Collections: In case you default on a number of your payments continuously and your creditor turns it over to a collection agency, then that account will be termed as being “sent to collections”. Accounts can be sent to collections before and even after being charged off. 
  7. Bankruptcy: A bankruptcy will send your credit score to rock bottom. While it may help you get rid of immediate loans and repayments, it will make it extremely difficult to get credit or to get it on good terms once you have a bankruptcy listed on your credit report. A bankruptcy also stays on your report for at least 7 to 10 years and should therefore be considered only as a last resort.

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