Top 5 Things That Will Lower Your Credit Score

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The one number with the ability to determine your future—for better or worse—is your credit score. This score, also known as a FICO score, determines your creditworthiness and the likelihood that you’ll pay your bills. A bad score can do more than keep you from getting a loan; it can also make you ineligible for rental housing or an amazing job. Steer clear of the top culprits that can lower your credit score.

5 Identity Theft

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Identity theft can be a silent credit killer, especially if it goes undetected for a while. A crafty thief may use your personal information to get new credit cards in your name on the sly and charge thousands of dollars to them. A craftier thief may receive expensive medical care under your name. The Federal Trade Commission says that you can protect your identity by not responding to soliciting phone calls or phishing emails. In addition, maintain the security programs on your computer and shred documents that contain sensitive information about you.

4 Ignoring Government Fines

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Little fines like those from the library for a late book return or parking tickets have the potential to ding your credit score, according to “Kiplinger.” This is because the fines have the potential to get sent to collections if you don’t pay them in time. To save your credit score, follow all traffic and parking laws, and return your books to the library on time. If you make a mistake and receive a fine, don’t ignore it.

3 Store Credit Cards

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Some store credit cards are tempting because they offer perks, such as discounts whenever you shop or free shipping when you order online. The perks are non-existent, however, when you consider the card’s interest rate and fees. A September 2011 “Kiplinger” article shares that store credit cards that allow delayed payments are the worst. As you let your debt sit, the interest rate may accrue, lowering your credit score and bringing you closer to your credit limit. Instead, save your money and pay for items with cash.

2 Late Payments

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Whenever you make a late payment on a bill, you get a red mark against your credit score. According to Investopedia, utility bills can do a lot of damage to your credit score if you’re bad about making timely payments, because the companies are quick to report offending customers to credit bureaus. To stay on track, pay your bills as they come or set up an automatic bill-pay service through your online banking account.

1 Debt

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If you let it get out of control, debt is like a hole that only gets deeper. While some debts—such as student loans or mortgages—are OK, it’s better to avoid it if you can. The credit reporting agencies know about every debt that you have, even the smallest ones. The more debt that you accrue, the lower your credit score. To avoid debt, stop using your credit cards and pay cash for all of your purchases.

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