What’s Hurting My Credit Score?

3 Min. Read

A strong credit score can open doors to better loan terms, lower interest rates, and greater financial freedom. But even small missteps can cause your score to dip. In this article, we’ll explore the most common actions that can negatively impact your credit score—like late payments, high credit utilization, and too many credit inquiries—and offer tips to help you avoid them.

What Hurts Your Credit Score?

If you want to maintain a healthy credit score, it’s important to understand what might be hurting your score. Here are the most common factors that can damage your credit:

Missed payments. Paying your bills on time matters. Missing payments on your loans or credit cards negatively impact your credit score. The mark against your score is based on how often you miss payments and how late the payments are. It takes 24 months to restore your credit score after just one late payment.

How to avoid it: Consistently pay your loans and credit card bills by the due date. Consider setting up automatic payments to ensure you never miss a deadline.

Credit card usage. Maxing out your credit cards is another way to hurt your credit score. When you’re issued a credit card, you receive a credit limit. For example, if your credit card limit is $1,000, using your entire limit can negatively impact your credit score.

How to avoid it: Avoid maxing out your credit cards and keep spending in check by setting a reasonable limit. A good rule of thumb is to spend less than 30% of your available credit.

Closing credit accounts too soon. The length of your credit history is a big factor in your credit score. Having a loan or credit card for a long time can positively affect your score, while accounts open for only a short period of time negatively affect your score. Closing a credit account decreases your available credit capacity and eliminates your credit history.

How to avoid it: Even if you don’t use them regularly, maintain a few aged credit accounts to strengthen your credit history. If you’re worried about keeping spending in check, place your card in a safe, “out of sight, out of mind” place.

Too many credit inquiries. Shopping for credit excessively can negatively affect your credit score. Opening new loans or credit cards in a short period may signal to lenders that you’re over-spreading your finances. More than three inquiries on your credit in one year can hurt your score.

How to avoid it: Slow down on opening new accounts to prevent multiple inquiries on your credit report in a short period. Also, keep a close eye on your credit report to spot errors or inaccuracies.

Additional factors that can negatively affect your credit score include borrowing from finance companies or transferring credit balances. These actions might signal to lenders that you’re struggling to manage debt, which could lower your creditworthiness in their eyes.

Want to learn more about how your credit score is calculated? Check out our article What Makes Up Your Credit Score for a closer look at the five key factors and tips for boosting your score.

Boost Your Credit by Preventing Common Pitfalls

Building and protecting your credit score takes time and consistency, but the payoff is worth it. A strong score can help you qualify for better loan terms, lower interest rates, and more financial opportunities. Avoiding these common pitfalls and practicing smart credit habits will set you up for long-term financial success.