Law School
Personal Finance

How To Make Your Credit Score Suck

Last week, I posted on the difference between a credit report and credit score. We learned that your credit score is an important number that decides not only your interest rates for loans, but can also effect whether you can rent an apartment or even get a job. If you really want a sucky financial life, all you have to do is have a sucky FICO score.

Here are 3 ways to make your credit score suck

  1. Not paying your credit card bills on time. Your payment record accounts for 35% of your FICO score. Just one missed payment can send your score down and your interest rates up. Flaky payment is a warning to creditors that you’re a risk. If you have missed a payment, focus on paying all your bills on time. That will help aleviate the damge you’ve done to your score.
  2. Canceling credit cards. This is probably the most counterintuitive idea, but canceling credit cards actually hurts your score. Say what? The length of your credit history accounts for 15% of your credit score. By canceling a long held credit card, you wipe out a large part of your credit history. Additionaly, your debt to credit ratio makes up 30% of your score. The more available credit you have, the better your score wil be. If you cancel a card, you reduce the amount of available credit; thus, your score goes down. If spending on a card is too tempting, cut it up instead of canceling the account. That you don’t have the card, but you still have your credit and credit history intact.
  3. Opening lots of new credit accounts. Everytime you open a new credit card or take out a loan, credit companies do a “hard pull” on your credit history. If you have lots of hard pulls on your credit history, it’s a red flag for potential lenders. Because hard pulls indicate taking on new loans, lots of hard pulls suggests you might be taking out more loans or credit than you can handle paying.
