Consumer Comeback Blog

How to Mess Up Your Credit Score

Your credit score matters, in more ways than you care to admit. It can keep you from getting a job, and it can make you pay more for your car insurance. If you mess up your credit score, you’re going to be in a world of hurt. Unfortunately, that’s what’s happening to lots of folks right now. The global economic crisis has had plenty of credit score victims.

Still, if your credit score isn’t horrible yet, it can be. If you want to mess up your credit score and make sure that no one is going to approve you for a home loan or a car loan or a credit card, here’s what you should do:

  • Pay late. Your bill paying history is the most important part of your credit score. Every time you pay late, you’re going to drop your credit score as much as five to ten percentage points or more. Miss two payments, and you’re  looking at a credit score drop of as much as 15 percent.
  • Get foreclosed. Foreclosures, short sales and other types of ways to dump a home that you owe money on will kick your credit score’s ass. Even if you give up your mortgage and the bank is able to recoup their costs via a sale, you’re still going to see your credit score drop by as much as a third.
  • Max out your credit cards. Charge up your balances, because when you do your creditors see you as a higher risk for default. The best credit scores will involve a ratio of debt to credit limit of 30 percent or less.
  • Close your old accounts. While it’s not nearly as important a factor as your bill paying history, the age of your credit accounts matters to your credit score. If you want to trash your credit score, close out your oldest credit accounts in favor of new ones.
  • Apply for a bunch of new credit. When you apply for a credit card or a loan, you’re going to see your credit score dip by a few points. When you do so excessively, it looks like you’re desperate for cash and creditors consider you a higher risk.