What Actions Will Harm Your Credit Score Article

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What Actions Will Harm Your Credit Score

Discover what actions will harm your credit score. Find out what affect these actions have on your credit score and your financial future.

Author: Lisa Nichols

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Before you pay your bills this month, learn more about what actions will harm your credit score. Your credit score is used by the credit bureaus as a measure of your credit worthiness. The national average credit score is 692, according to Experian Information Solutions, Inc. Credit scores fluctuate by credit bureau, but they are usually in the same range and the national average can serve as a good benchmark. Lenders, credit card companies and other entities use your credit score as a major factor in determining your credit worthiness. So, what actions will harm your credit score?

What Makes Up a Credit Score

A number of factors go into a credit score. The exact formula used by any company is proprietary, but credit scores are usually broken up into several categories. 35 percent of your credit score covers your payment history. 30 percent is based upon the amount you owe. 15 percent of your credit score is related to the length of time that you have had a credit history. 10 percent of your credit score is tied into the types of credit that you have. The final 10 percent of your credit score reflects your new lines of credit.

Late Payments Do the Most Damage to Your Credit Score

Based on the factors that make up a credit score, it’s easy to understand that certain actions will be harmful to your credit history. While most of your credit history is made up of lines of credit and loans, energy companies and wireless phone companies are also starting to report to the credit bureaus. Making late payments has the biggest impact on your credit score. In addition to making late payments, the number of days’ delinquency also impacts your credit history. A payment that is 30 days late is weighted less heavily than a payment that is several months late and ends up in collections.

Other Factors that Will Harm Your Credit Score

Owing too much on any account, and the total amount of credit you have vs. the amount you owe will also harm your credit. The length of time that you have had any credit at all, the number of new lines of credit and credit inquiries will also impact your credit score. The credit bureaus like to see a mix of account types to include installment loans, different types of credit cards and other accounts, like mortgages.

You can order your credit report and credit score online to see where you stand based on the national average credit score.

About Author

Lisa Nichols is a freelance writer, website content strategist and marketing and PR strategy consultant. Originally from Eugene, Oregon, Lisa is currently based in Covington, Kentucky (also known as greater Cincinnati, Ohio).

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