Top Ten Things That Lower Your Credit Score

While there are people who stash their cash under their bed in shoe boxes and don't need credit for any purchases, most people will need to borrow money at some point. Getting money from a lender or bank can be a process falling somewhere between simple and impossible. The single largest factor in your money borrowing is your credit score.

From getting a credit card to buying a car or house, your credit score affects nearly every aspect of your financial freedom. Having a good credit score can lower your mobile phone payments, get you a better offer on a vehicle trade-in, get better interest rates on student loans, and help you get into a home or apartment. Keeping your credit score high is a valuable tool in your future purchases and endeavors.

Your credit score is factored from multiple sources and is a three-digit number representing your creditworthiness; the likelihood you can and will pay off any money you've borrowed. Unlike your first day of school where you start off with an A and just have to keep from losing it, your credit score builds over time and can drop in a flash.

Below are the top ten factors that can lower your credit score and ruin your financial trustworthiness.
The Top Ten
1 Making late payments

An estimated 35% of your credit score is determined by whether you pay your bills on time or not.

2 Being sent to collections

"Collections" are third-party companies that get paid to collect unpaid debts. If you're late or refuse to pay your bills, you might end up getting some unwanted phone calls.

3 Filing for bankruptcy

Filing for bankruptcy is like getting a black eye the day before a job interview. Nothing says you're untrustworthy like proving it in court.

4 Maxing out your credit cards

If you've already borrowed all the money your credit cards will allow, it looks bad to the banks and credit companies. They will be hesitant to give you more.

5 Getting a court judgement

This is when you've ducked out of paying your bills long enough that the court had to get involved to make you pay. Think about having your paycheck garnished and not having a say in where your money goes.

6 Going through foreclosure

Having the bank repossess your home will raise all sorts of red flags to the credit bureaus that you can't be trusted with large investments.

7 Closing your old credit cards

15% of your credit score is determined by your credit history. Once you've started acquiring credit, leaving it running for a long time will look good. Shutting off your own credit looks bad.

8 Applying for multiple credit cards at once

If you're living within your means, then you really shouldn't need more than one credit card. Applying for multiples shows the banks and lenders that you plan to overstep your income.

9 Not having diverse borrowing history

Having only personal loans or only credit cards as your source of credit can hurt you in the long run. Just like playing the stock market, there's value in diversifying your credit type.

10 Missing payments

Paying late is one thing, but completely missing payments is even worse. When it comes to your debt, the old saying works best: Better late than never.

The Contenders
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