How to Kill Your Credit Score

Credit scores are often an overlooked part of personal finance. Yet, it is one of the most vital parts of your financial future. Your credit score and credit history will play a massive role in most financial situations throughout your life. While many think that a credit score only really matters when it comes to being approved for loans at lower interest rates, it goes far beyond that. For instance, insurance companies may use your credit scores to set policy premiums. Landlords and apartment management companies may use your credit score to determine if you are eligible to rent at their property. Therefore, it is very important to understand how to keep your credit score healthy. In this article, The School of ACE will cover the five major ways your credit score can plummet.

What is a Credit Score?

A credit score is a number that reflects your creditworthiness. It is calculated based on information in your credit report, which is a record of your borrowing and repayment history. The most common type of credit score is the FICO score, which has a credit score ranging from 300 to 850. Some lenders and banks may also use the VantageScore, which uses the same credit score ranging as FICO. A higher credit score indicates you’re a lower-risk borrower, which means you’re more likely to be approved for loans, better interest rates, and lines of credit.

5 Ways to Hurt Your Credit Score

1. You Never Check Your Credit Report

Credit reports are a snapshot of your credit history; if you’re not regularly checking them, unknown errors could hurt your score. The federal trade commission found that one in five people have an error on at least one of their three credit reports. In addition, regularly checking your report can help catch any fraud linked to your name through annual reviews.

You can get a free copy of your credit report every 12 months from the major credit bureaus Experian, Equifax, and TransUnion at You can also obtain this report through multiple third-party reporting agencies. Often, most credit unions or issuers offer free FICO credit score reports. Once you receive your credit report, you will want to review it carefully. The list below is the standard information to ensure accuracy on accounts tied to your name.

Personal Information

  • Errors in your identity data, such as wrong name, phone number, or address
  • Accounts belonging to another person with the same or similar name to you
  • Incorrect accounts resulting from identity theft

Balance errors

  • Accounts with incorrect current balance
  • Accounts with incorrect credit limit

Data management errors

  • Reinsertion of incorrect information after it was corrected
  • Accounts that appear multiple times with different creditors listed

Suppose you find errors on your credit report and want them corrected. In that case, the best way to do so is by contacting each database that contains this information. What if they don’t resolve the issues with their databases? In that case, filing a dispute through these agencies will be necessary - but remember, there are different procedures for handling such disputes between competing services/databases. Doing research beforehand could help avoid time wasted and potential mistakes made during filing paperwork without legal assistance!

2. Late Payments

Late payments can significantly impact your credit score. Credit scoring models typically consider late payments as a sign of financial stress and may penalize you accordingly. Late payments can also stay on your credit report for up to seven years, making it difficult to qualify for new lines of credit. In addition, late payments may also result in additional fees and interest charges. As a result, it’s important to pay your bills on time and to keep a close eye on your credit report. Doing so can help protect your credit score from the negative effects of late payments.

3. High Credit Card Balances

You’re not alone if you’re carrying a credit card balance. In fact, the average credit card holder has an average debt of $5,221, according to the 2021 Experian Consumer Credit Review. However, you may not realize that your credit utilization is the second most important part of your credit score, accounting for30% of your FICO score.

Your credit utilization is the amount you use compared to your available credit. If you have a credit limit of $1,000 and a balance of $500, your credit utilization is 50%. So, in the example above, you would like to keep your balance below $300. If your credit utilization is too high, it can hurt your credit score in two ways. First, it can lower your score because it indicates that you’re using too much of your available credit. Second, it can lead to late payments because it can be challenging to keep up with large balances.

4. Opening too Many Credit Cards at Once

Opening multiple credit accounts in a short period can hurt your credit score. Credit scoring models typically consider your credit history, including the length of your credit history, the types of accounts you have, and your payment history. Opening several new accounts in a short period can shorten your average account age, which can be viewed negatively by creditors. Opening multiple accounts and failing to make payments on time will also damage your score. Therefore, it’s important to be thoughtful about opening new credit accounts and to only open as many as you can reasonably manage. Doing so will avoid harming your credit score and jeopardizing your financial well-being.

5. Co-Sign on Someone else’s Credit Card or Loan

If you’re thinking of co-signing for a friend or family member, consider the impact on your credit score before making such an important decision. As a co-signer, your credit score may be negatively impacted if the main account holder fails to make payments. Here are some common ways being a co-signer can damage your credit score:

Missed or late payments

Missed or late payments can severely affect a cosigner’s credit score and credit history. When a borrower misses a payment, the cosigner is legally responsible for repaying the debt. This can quickly damage the cosigner’s credit score, making it difficult to qualify for loans and other forms of credit in the future. Additionally, late payments can stay on the cosigner’s credit report for up to seven years, making it hard to rebuild their credit history. As a result, borrowers need to be aware of the potential consequences of missing or making late payments before taking out a loan with a cosigner.

You will owe more debt

Since the consignee’s debt will appear on your credit report, the amount of debt that you currently owe will increase and be added to the “amounts owed” portion on your credit report.

If you are considering becoming a co-signer, remember that the responsibility can affect your credit score. You should ensure a plan to pay off debt once it is incurred and learn how long these obligations will remain on your credit report.

The Bottom line

Your credit score is one of the most important aspects of your personal finance. Understanding how your credit score works and what can impact it negatively is essential. This article has covered five ways your credit score can plummet. For more information about credit scores, please visit The School of ACE blog for additional personal finance and money management content. Our mission is to empower people with the knowledge and skills they need to make smart financial decisions.


This blog is not intended to provide any tax, legal, financial planning, insurance, accounting, investment, or any other kind of professional advice or services. To make sure that any information or suggestions in this blog fit your particular circumstances, you should consult with an appropriate tax or legal professional before taking action based on any suggestions or information that we provide.