Your credit score is incredibly important when it comes to making any big purchases. If you are thinking about purchasing a car or your first home, then banks are going to look into your credit score to determine what kind of loan you will receive. There is plenty of information on how to keep a good credit score, but it is equally as important to know what will drive your credit score down.


Missing Payments


Your payment history accounts for thirty-five percent of your credit score. Missing a payment over thirty days could drop your credit score one hundred points. Credit card companies may not report a late payment until sixty days after it is due. By the sixty day mark, your credit score may have suffered severe damage. Set reminders for yourself about when payments are due on your credit card. Never miss a payment, and your credit score will be just fine.


Cancelling Credit Cards


If you have a credit card that you do not use anymore, do not cancel it. Cancelling a credit card with a zero balance eliminates all the credit history you have associated with that card. Say you have had a credit card for four years and then cancel it one day. Those four years of purchasing items on that credit card disappear, making your credit history seem shorter than it actually is. Keep your old credit cards open to showcase your extensive credit history!




When a payment is overdue for an extended period of time, credit card companies will either sell or hire a third party to collect the payment. A collection usually occurs after six months of no payments. A collection can drastically reduce your credit score by one hundred points, sometimes more. A collection can stay in your credit history for up to seven years, affecting any future purchases or loans you apply for.


Settling Debt


If you settle a debt with a creditor and it is less than the amount you originally owed this can dramatically affect your credit score. People who have settles a debt with a creditor saw drops in their score ranging from forty-five to one hundred points.




Declaring bankruptcy has the most detrimental effect on your credit score. Filing for bankruptcy can stay on your credit report for almost ten years. A credit score can suffer up to a two hundred and forty point reduction from declaring bankruptcy.