Your credit score influences many different aspects of your life, from where you can live to what type of job you can hold, so it is very important that you try to keep your credit score as high as possible. There are a number of ways available to improve a credit score, but there are many more ways that a credit score can be destroyed, which often causes years of anguish and taking large amounts of money to return the credit score to its previous heights. Here are some surefire ways to kill your credit score.
Late Payments
Late payments on your accounts are reported to the major credit reporting bureaus to be included in the calculation of your credit score. Each late payment lowers your credit score by a significant amount and your credit history will reflect these late payments for seven to ten years. Missing payments on multiple accounts for multiple months can reduce your credit score by more than 100 points, an amount that can take years to gain back. Because credit card account information is easily obtained by the credit reporting bureaus, late payments on these accounts may affect your credit score more quickly than late payments made on other accounts.
Canceling Older Credit Accounts
The length of your credit history is an important part of your credit score. The length of your credit history is generally determined by how long you have held the credit card accounts listed in your credit report. If a credit card account is closed, the information is removed from your credit history, depriving you of the benefits of having held the account for a significant amount of time. Canceling your oldest credit card can drop your credit score by a large amount.
Using Your Entire Credit Card Balance
Another factor used by major credit bureaus for calculating your credit score is the amount of your available credit that you are using at any given time. Using your total amount of credit available indicates to credit bureaus that you are not using your credit wisely. This causes a reduction in your credit score because you are now viewed as a credit risk by lenders. You should use no more than 30% of your available credit on each of your credit card accounts if you would like your credit score to remain high. Using more than this amount can cause a significant drop in your score.