Your credit score is more than just a number — it’s a reflection of your financial habits and a key factor in determining loan eligibility, interest rates, and even job opportunities. Yet, many people unknowingly make mistakes that lower their score. Understanding what can harm your credit is the first step toward protecting it and maintaining long-term financial health.
Missing or Late Payments
Payment history has the biggest impact on your credit score. Even a single missed payment can significantly lower your score and stay on your credit report for up to seven years. Setting up automatic payments or reminders can help ensure you never miss due dates, keeping your credit record clean and consistent.
Carrying High Credit Balances
Using too much of your available credit — known as credit utilization — can make lenders see you as a higher risk. Ideally, you should keep your utilization below 30% of your total limit. For example, if your credit card limit is $10,000, try to keep your balance under $3,000. Paying down balances regularly and avoiding unnecessary purchases helps maintain a healthy ratio.
Closing Old Accounts Too Soon
While it might seem smart to close unused credit cards, doing so can hurt your score by shortening your credit history and reducing your total available credit. Instead, keep older accounts open and active with small, manageable purchases. This helps demonstrate stability and long-term financial responsibility.
Applying for Too Much Credit at Once
Each time you apply for new credit, a hard inquiry is made on your report, which can temporarily lower your score. Applying for several loans or credit cards in a short period signals financial distress. Be selective — only apply when necessary and research options beforehand.
Ignoring Errors on Your Credit Report
Even small errors — like incorrect balances or outdated information — can impact your score. Regularly reviewing your credit report ensures accuracy and helps you spot potential fraud early. You’re entitled to a free report annually from major credit bureaus through AnnualCreditReport.com.
Conclusion
Maintaining a strong credit score is about consistency, awareness, and good financial habits. Avoiding common mistakes — like missed payments or high balances — keeps your credit healthy and your financial opportunities open. With discipline and regular monitoring, you can safeguard your score and secure a stronger financial future.
