How To Make Your Credit Score Suck

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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.

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9 Comments

1. Clever Dude on 05.07.2007 at 07:17 (Reply)

   I’d highlight that part about “canceling a long held credit card”. I mentioned canceling a number of my cards on my site and got quite a few responses that suggested I should never cancel my cards once I’ve gotten them.

   Sure, I agree you shouldn’t cancel long help cards, but don’t feel like you need to keep another other cards than your oldest ones, especially if you have a problem with spending. Additionally, if you have a number of cards, and some have really high limits, and others have pretty low limits, feel free to cancel the low limit cards. I have about $80k in limits across 7 cards. Two of those cards (my 2 oldest) account for about $50k of it. I won’t cancel those for both reasons mentioned (age, limit), but I don’t have a problem canceling the newer or lower limit ones.

   Lastly, don’t worry so much about your score unless you plan on buying something big (house, car) in the next 1-1.5 years, or renting a new apartment or registering for new utilities. However, if you already have above 700 credit, don’t worry about a 5, 10 or 20 point drop. You’re still well above average!

2. Dennis on 05.07.2007 at 09:29 (Reply)

   Thanks for the tips!

3. Minimum Wage on 08.07.2007 at 17:01 (Reply)

   My credit went into the tank several years ago after my health went in the tank. (After an extended hospitalization I was unable to work for about a year, couldn’t pay my bills, and had to relocate to live with family.) All my active open accounts were closed and charged off, and I ended up with two adverse credit report items which won’t go ever go away unless resolved. I can’t resolve these issues on my minimum wage income, so these derogs appear here to stay, which means I don’t see any way to get my credit score back to a normal level.

   I see sucky options, but do I have any non-sucky options?

4. Brett McKay on 10.07.2007 at 20:27 (Reply)

   CleverDude-
   Thanks for stopping by and commenting. Sorry for taking so long to get back. I’ve been on vacation and haven’t had a computer.

   Good point on canceling cards that have low limits and are new. That shouldn’t hurt your score.

   I also think you make a good point about not obsessing about your credit score too much. I’ve been absolutely paranoid about mine lately. I don’t know why seeing how it’s above 700.

5. Crouching Debt, Hidden Credit Card Fees | The Frugal Law Student on 20.07.2007 at 05:37

   […] your credit limit on your card, come cards charge you as much as 50% to make the bump. While having more available credit is good for your credit score, the fee might not make it worth […]

6. gkru on 09.10.2007 at 19:15 (Reply)

   So a bad credit score can determine even whether or not you get an apartment or a job, huh?
   And you believe you’re a free man in a free country, do you?

   1. Brett McKay on 10.10.2007 at 06:01 (Reply)

      gkru-
      Yes, I still believe I’m a free man in a free country. People have the freedom to be irresponsible and screw up their credit score. They have to pay for the consequences of that behavior.

7. The Best of Frugal Law Student 2007 | The Frugal Law Student on 31.12.2007 at 10:29

   […] Finance Advice From Kanye West: “If you aint no punk holla ‘We Want Prenup!’” How To Make Your Credit Score Suck The Best Personal Finance Advice I’ve Ever Received Why Personal Finance Books Suck Symptoms of […]

8. www.vezol.com on 10.08.2008 at 18:49 (Reply)

   These article is so funny..why would you want to
   do this to your credit score.

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