Your credit score is one of the most important aspect of your financial life. Having a high credit score will allow you to save money on almost everything that you buy. Here are a few of the top ways that you can effectively destroy your credit score.
1. Maxed Out Card
Many people today regularly carry maxed out credit cards around. In fact, many people have two or three cards that are completely maxed out. Although making the minimum payments on these cards is bad enough, this can also do significant damage to your credit score. When the credit bureaus are calculating your credit score, one of the criteria that they look at is how much credit you have used in relation to how much is available to you. If you fill up your credit cards, this shows than that you do not know how to handle money properly. As soon as credit is made available to you, you have to go out and spend it. By keeping your credit card balances below 30 percent of the maximum, you will be able to keep your credit score looking good.
2. Late Payments
If you really want to mess up your credit score, making late payments is probably going to be the best way to do so. The number one factor that credit bureaus used when coming up with your credit score is whether or not you make late payments. When referring to late payments, this does not necessarily mean that the payment has to be extremely late. Any payment that is 30 days late or more is going to reflect as a negative on your credit score. Therefore, if you want to build up your credit score, you should do your best to always make your payments on time.
3. Debt Settlement
The process of debt settlement involves paying a creditor a lump sum in order to settle an account with them. When you do this, you can save some money on the debt that you owe. However, you are also going to negatively affect your credit score as well. From the point of view of the creditor, you are not living up to your end of the bargain when you settle. You borrowed money from them and then you did not pay back the full amount.
Something else that can negatively impact your credit score is going through a foreclosure. A foreclosure is a very negative mark on your credit report and it will remain there for at least seven years. If you are planning on purchasing a house in the future, a foreclosure is going to make it very difficult to do so.
Perhaps the most effective way to destroy your credit score is to file bankruptcy. When you go through a bankruptcy, you are going to turn off every creditor that ever looks at your credit report. Bankruptcy is going to stay on your report for 10 years and it will be difficult to purchase anything in that amount of time.