Five Credit Score Killers and Boosters

Most people know that paying your credit cards late can wreck havoc on your credit score, but there are many other less-known ways to harm (and help) your credit. Here are five things that can damage your credit, and five things that can raise your score.

Five Credit Score Killers

1. Paying Late – Paying a bill, especially a credit card, late, can stay on your credit score for up to seven years. The good news is most card companies won’t report you late unless you’re really late – 15 or 30 days or more – or if you are consistently late.

2. Being Maxed Out – If you are at or near your credit limits on all of your revolving credit accounts, your credit score is going to plummet.

3. Applying for Too Much Credit – Every time you apply for credit, an inquiry appears on your report for at least six months, and up to two years. More than two inquiries within six months will hurt your score.

4. Changing Addresses – Moving can actually lower your credit rating temporarily, as can changing employers. If you are applying for credit and have moved or changed jobs within the last year, include your previous address or employer on the application.

5. Not Enough Credit – Your credit score is based, in part, by how long you have had credit, and how much. If you have paid faithfully for five years, but only have one credit card with a $1,000 limit, your credit score is not going to be as high as if you had two or three accounts with a combined limit of $10,000.

Five Credit Score Boosters

Besides paying on time, every time, here are some other ways to improve your credit score.

1. Mix Up Your Accounts – Your credit score will be higher if you have an appropriate mix of fixed-term loans (like a student loan or auto loan), and revolving accounts (like credit cards). Two to three of each is perfect.

2. Keep Old Accounts Open – Even if you don’t use the first credit card you got five years ago, don’t close it out. Your credit history is only as long as your oldest account, so closing an old credit card can actually harm your credit.

3. Get Higher Limits – Ask your credit card companies to raise your credit card limits. No, not so you can go on a shopping spree, but so your available credit increases and your utilization ratio decreases.

4. Co-Sign a Loan – Okay, this one is a bit risky, but if you have the opportunity to co-sign a loan for a trusted family member, and you can monitor them to ensure the loan is paid on time, this can add another good account to your credit history.

5. Pay It Off – Nothing boosts your credit score like getting rid of debts and lowering your utilization ratio to below 20%. If you are working on paying down your debts, you should see your credit score go up almost every month!

Published or updated on April 9, 2008

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About David Weliver

David Weliver is the founding editor of Money Under 30. He's a cited authority on personal finance and the unique money issues we face during our first two decades as adults. He lives in Maine with his wife and two children.

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