How to Destroy Your Credit

March 18th, 2009 Filed under: Uncategorized — Credit Card Author |

It is so easy to destroy your credit. In fact, you can do it in only a couple of months. According to CNN Money, the five easiest ways to destroy your credit score are:

1. Paying your bills late.

2. Carrying a high balance on your credit cards.

3. Closing a credit card account.

4. Signing up for too many in-store cards.

5. Not paying your parking tickets.

If you don’t pay your bills on time, you will never have good credit. Late payments are the number one destroyer of your credit score. Don’t let your bills ever be late. If you have a habit of not paying things on time, you should set your bills to automatically withdraw from your checking.

If it’s not your memory, but your lack of money that is keeping you from paying your bills, you need to sit down and cut out some spending. Create a workable budget that will allow you to pay all of your bills on time. Remember, it’s not that you don’t have enough income, it’s that you spend too much money.

When you carry a high balance on your credit cards you have too much debt. Lenders want to see that you can successfully manage your debt. This means that you can pay your debts down to a reasonable level. You aren’t overspending and you aren’t keeping that debt hanging on forever. Credit card debt is so costly. You should eliminate it as quickly as you can. If you have a good handle on your credit card debt, this shouldn’t be a problem.

When you close credit card accounts you should be careful. If you are closing them all to prevent their usage or possible identity theft, then go ahead and close them. You have already outweighed the costs with the benefits. When closing just one or two cards, you need to determine which cards you have held the longest. You want to keep the oldest cards to lengthen your credit history. Pick the cards with the most favorable terms — lowest interest rates, no fees, longest grace period — and then cancel the rest.

When you sign up for too many in-store cards, you are putting yourself at risk for having too much revolving credit. The same goes for credit cards. You can have a zero balance on ten cards and still be looked at warily. The lender sees that at any moment, you can go out and just charge up a storm.

When you don’t pay your parking tickets, library fines or other bills, you could become a target of a collection agency. And that collection agency is going right to your credit report. Many municipalities are turning unpaid tickets over to collections, because they know that to get their money, they have to target you where it hurts.

So, if you want to improve or maintain your credit, you should pay your bills on time, have low balances on your cards, keep the oldest credit open, limit the number of revolving accounts you have and pay all of your obligations, no matter how inconsequential they may be to you.

Martin Lukac represents RateTake Refinance Rate mortgage marketplace. RateTake matches consumers with multiple lenders offering low Refinance Rates from our network of accredited lenders

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