There are many different things that can negatively affect credit scores. There are many different things that people regularly do that can significantly impact your credit history. Here are five ways that you could potentially be killing your credit scores.
1. Maxed out Card
One of the most common things that negatively affects credit scores is a maxed out credit card. Many people go around with multiple credit cards that are all maxed out. This can significantly lower your credit score in a hurry. Creditors like to see balances on your credit cards at or below 30 percent of your available credit. If you have a credit balance that is higher than this percentage, it is going to look like you do not have control of your financial situation. This can lower your credit score by anywhere from 10 to 45 points per card.
2. 30-Day Late Payment
Something else that can effectively kill your credit score is a 30 day late payment. Your payment history is one of the biggest factors when it comes to calculating your credit score. If you make a late payment, they are going to dock you on your credit score. This one action can take anywhere from 60 to 110 points off of your credit score. Therefore, you want to avoid making late payments when at all possible. This is just with a 30 day late payment. If you waited 60 or 90 days to make your payment, you can imagine how bad it would hurt you.
3. Debt Settlement
Another way that many people hurt their credit scores is to settle their debt. Debt settlement involves paying one of your creditors less than what is owed in order to eliminate your account with them. When you do this, you are going to be able to save some money on the debt that you owe. However, it is going to severely hurt your credit report. If you utilize this strategy, you could lose anywhere from 50 to 125 points on your credit score.
One of the biggest hits to a credit score occurs when you go through a foreclosure. Lenders do not like to see a foreclosure on your credit report. This is especially true if you are going to try to get a mortgage. If you go through a foreclosure, you could lose anywhere from 85 to 160 points on your credit score. This can be devastating and it can take a long time to bounce back from.
Bankruptcy is by far the worst thing that you can do when it comes to your credit scores. Bankruptcy is going to be the quickest way that you can find to completely ruin your credit. Creditors will not want to work with you after filing for bankruptcy. It is going to stay on your credit report for 10 years. When you file for bankruptcy, you are going to lose somewhere between 130 and 240 points from your credit score.