How to Kill Your Credit Score

Sometimes the most peculiar financial fumbles occur close to home and you have to laugh, although it’s probably not the right thing to do.  Sorry George – new staffer at ACE Cash Express.  I don’t usually recap bad luck of fellow employees but his story does bear sharing with my readers. 


 As a new Product Manager for our Elite Prepaid Debit Card program, new hire George jumped in with both feet.  From day one, he researched debit vs. credit card user experiences and how they affected consumer’s pocket books.  George went full blast.  He dug into the rate and fee structures which banks typically over charge for.  And because he’s a very thorough individual, George applied for several credit cards on the sites he visited.  What a dedicated worker, right?  Go George!  Unfortunately for him, that’s where his diligence backfired. 


After spending two weeks performing above-and-beyond service at the office, George got back to his personal life and begun shopping for a house.  To compare potential financing options, he pulled his credit history to see who could make him the best deal.  George didn’t have any reason for concerns.  He paid his bills on time and made sacrifices to maintain a pretty impressive credit rating.  He even received an excellent rate on the car he bought earlier this year.  Once again, go George! 


Imagine the look on his face when he saw that his credit score had plummeted 120 points… in a few weeks!  Our friend George discovered that millions of Americans are also getting hit with point deductions when applying for too many open lines of credit.  


As it turns out, a significant portion of credit scores are affected by the number of inquiries in a 12 month period. As few as four inquiries can greatly impact your credit rating.  Most credit bureaus view eight inquiries as a high risk individual!  Therefore, shopping for the best deal on a house or car can tank your chances of getting the best rate, even with a good payment history.  It turns out new calculations have been designed after the recession hit to combat rampant credit card abuse. 


Recently, waves of consumers facing foreclosure or bankruptcy have applied for tons of credit cards with hopes of using them to stem the tide until their finances can be worked out.  In the meanwhile, houses are lost, bankruptcies are filed and credit card companies lose millions in unpaid balances.  Credit bureaus now view inquires as early indications of financial distress in some cases and may reflect that in your score,  so consider avoiding excessive rate shopping as it may cost you a good deal and a lot more money. 


George was merely the latest casualty in our country’s economic crisis.  I’m sorry I laughed at his calamity.  That was just plain wrong. 


Written By Victor McGlothin Victor writes money management tips and other financial hints for ace cash express.  Before joining ace, Victor wrote several bestselling novels and worked in upper management in the banking industry.  When Victor is not helping consumers with responsible spending ideas, he’s working on a “Talking Money Tips” audio book.  Follow him on twitter @iwritemoneytips  and @acecash