How to Screw Up Your Credit Score in 10 Easy Steps
“Your goal should be to pay off your credit card bills in full at the end of each month and set aside money toward your emergency savings.”
– Suze Orman
If you woke up this morning and thought, “I wonder what I can do to tank my credit score — really drive it into the dirt”— you’re in luck. Here are 10 easy steps to send your credit score plummeting in no time at all.
- Pay late, or not at all. Late and missing payments are the death knell of a credit score. So if you want to see “how low you can go,” steer clear of automated online bill payment, which could easily prevent those credit-damaging late payments.
- Close old accounts. This may seem counterintuitive, but maintaining older accounts in good standing can actually give your credit worthiness a boost — so don’t do this if you want bad credit. This is because the length of your credit history is one factor taken into account when agencies calculate your all-important FICO score.
- Don’t use your credit … ever. Establishing credit but never using it will keep your credit down in the dumps. Whatever you do, don’t use your accounts regularly and moderately — and certainly don’t pay off your balances in a timely fashion. Showing this pattern of responsible credit use will raise your score over time, so if you want awful credit, run your cards up to the limits and pay late.
- Ignore your creditors. If you’re having a problem paying your bills, just avoid thinking about it and hope your creditors won’t notice a couple of missed payments. Being proactive and reaching out to creditors before you start racking up late fees might save your credit rating, so stay silent to achieve that rock-bottom score.
- Co-sign lots of loans. If you co-sign a loan, did you know you’re equally liable for that debt? And your credit score is just as susceptible to damage from any nonpayment. Even the most well-intentioned people can face unexpected difficulties that prevent them from meeting their financial obligations, so co-signing loans can help contribute to your credit’s early demise.
- Never read your credit report. You may have an errant mistake on your credit report that’s lowering your score and subsequently increasing the interest rates you pay on loans. If you think credit reporting agencies are required to notify you of any damaging information on your report, you’d be wrong. Your score can be penalized due to anything from simple clerical errors to something more serious like identity fraud. You’re entitled to receive a copy of your report from all three credit reporting agencies every year for free. And a credit monitoring service can alert you to any fraudulent activity. So if you really want to see your score plummet, avoid your credit report at all costs.
- Take out too many credit cards. All those shiny new credit card offers that land in your mailbox — sign up for all of them to sink your score. And when you do, as a bonus, your available credit limit can be held against you when you apply for a car loan or mortgage (just in case you have even bigger self-sabatoging financial goals than wrecking your credit).
- Never apply for credit. If you think you can protect your credit score by staying out of the game entirely, think again. Credit is a use it or lose it kind of thing. So if you don’t want a good score, never get credit to begin with — easy peasy! .
- Borrow too much. It can be easy to lose track of how much you’re spending when you’re swiping instead of pulling cash out of your wallet for purchases. So try not to think about the fact that every time you use a credit card, you’re taking out a loan. Use it indiscriminately to pay for as much as you possibly can to achieve that lousy, no-good credit status.
- Declare bankruptcy … just for the heck of it. It’ll stay on your report for years.
While money can’t buy happiness, damaging your credit certainly won’t help make things better — so do all you can to protect yours. Especially if you’re just starting out financially, it’s important to avoid making mistakes that can take years to undo. And because there are no quick fixes for bad credit, it’s important to do everything you can to avoid problems in the first place.
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What tips do you have for keeping your credit in tip-top shape? Please share and help someone else who might be trying to improve theirs.
Source
https://www.consumerfinance.gov/ask-cfpb/how-do-i-get-a-copy-of-my-credit-reports-en-5/
