If your credit score is lower than you expected, certain habits might be silently dragging it down. This guide reveals 7 common mistakes that could be hurting your credit score and more importantly, how to fix them quickly and responsibly.
1. Late or Missed Payments
What it does:
Payment history is the biggest factor in your credit score, making up about 35% of it. Even one missed payment can drop your score by 90 to 110 points.
Why it hurts:
Lenders see late payments as a sign of risk. If you miss payments, they think you might not repay your debts on time.
How to fix it:
- Set up automatic payments for all bills.
- If you miss a payment, pay it ASAP—the longer it goes unpaid, the more damage it does.
- Call your creditor and ask if they can remove the late mark as a one-time courtesy (especially if you’ve been a good customer).
2. High Credit Card Balances
What it does:
This is about credit utilization—how much credit you use compared to your limit. Ideally, keep it below 30%, but below 10% is best.
Why it hurts:
Maxing out your credit cards shows lenders that you may be living beyond your means.
How to fix it:
- Pay down your credit cards aggressively.
- Ask for a credit limit increase (but don’t spend more).
- Spread balances across cards rather than maxing one out.
Example:
If your limit is $1,000, keep your balance under $300—better if under $100.
3. Too Many Hard Inquiries
What it does:
Every time you apply for a loan or credit card, the lender does a hard inquiry, which knocks off a few points.
Why it hurts:
Lots of applications in a short time suggest desperation for credit or financial trouble.
How to fix it:
- Avoid applying for multiple credit products at once.
- Use prequalification tools that only trigger a soft inquiry.
- Check your credit score with services like Credit Karma—it won’t hurt your score.
4. Closing Old Credit Accounts
What it does:
Old accounts help your credit age, and closing them reduces your overall credit limit, which can raise your utilization rate.
Why it hurts:
A shorter credit history means less proof of how well you manage debt.
How to fix it:
- Keep old credit cards open, even if you don’t use them regularly.
- If there’s an annual fee, ask the issuer to downgrade the card to a no-fee version.
- Use the card occasionally to keep it active, then pay in full.
5. Debt Collections
What it does:
When a debt goes unpaid for a long time, it’s sold to collections. This can crush your score and stay on your report for 7 years.
Why it hurts:
Collections show you failed to repay debt entirely, which is a red flag to lenders.
How to fix it:
- Contact the collection agency and ask for a “Pay for Delete” agreement—pay the debt in exchange for having it removed from your report.
- If the debt is wrong, dispute it with credit bureaus like Equifax, Experian, or TransUnion.
6. Errors on Your Credit Report
What it does:
Mistakes like incorrect balances, accounts you don’t recognize, or false late payments can drag your score down unfairly.
Why it hurts:
Lenders may make decisions based on incorrect data, which could mean higher interest rates or denied applications.
How to fix it:
- Check your credit report regularly. You can get a free report once a year from all 3 major bureaus at AnnualCreditReport.com.
- Dispute any errors online. Bureaus must investigate within 30 days.
7. Only Using One Type of Credit
What it does:
Having only one type of credit (e.g., just a credit card) limits your credit mix, which affects 10% of your score.
Why it hurts:
Lenders prefer to see that you can manage different types of debt, like credit cards, auto loans, or student loans.
How to fix it:
- Consider taking out a small personal loan or credit builder loan if you only use credit cards.
- Use a secured credit card to build or rebuild credit if you’re just starting out or had past issues.