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The Worst Things You Can Do to Your Credit History

Avoid Mistakes That Damage Your Credit Score

Learn About Credit HistoryYour credit history record is a lot like a fingerprint. It's unique to you, it follows wherever you go, and if it's damaged, the discomfort lingers for a long time. Your credit history as documented on your credit report and reflected by your credit score can cost or save you thousands of dollars whenever you apply for credit for a home or car loan, carry a balance on a credit card, or borrow money for anything else. Because your credit history has such a big impact on your daily living, it's critically important to know what's in your credit history, how your credit score is determined, and what's on your current credit report by receiving regular credit reports.

Part of building a good credit score and improving it over time is being aware of and avoiding mistakes that can count against you. Certain mistakes can stay on your credit history for many years. Some of the worst things you can do to damage your credit history are:

  • Making consistently late payments. Everyone misses a payment now and then, and this is noted on your credit report. If a late payment is clearly an accident, it has little bearing on your credit score. However, if you're consistently late making payments, lenders regard you as a very high risk; your loan request may be denied, or you may be charged a very high interest rate.

  • Filing for bankruptcy. A bankruptcy stays on your credit history for at least seven years. From a lender's perspective, filing for bankruptcy means that you represent a very high risk for defaulting on a loan. No matter how dire your financial situation might be, filing for bankruptcy should be avoided unless there are absolutely no other options.

  • Not receiving regular credit reports. This one is less obvious but is no less important. If you don't receive and review your credit report on a regular basis, errors that can drag down your credit score can appear on your credit history without you knowing about them.

  • Long periods of unemployment. Lenders like predictability and continuity in a credit applicant's past. Long periods of unemployment indicate to them that the applicant probably won't have a steady source of income to repay debts.

  • Applying for a lot of credit lines in a short time. Each time you apply for credit, it's noted on your credit history. From a lender's perspective, multiple applications in a brief period of time indicate that you've been turned down and are seeking other sources of credit.

These are just a few examples of things that reflect badly on your credit history and drive down your credit score. No matter how good your credit history may be, it's always a good idea to get a copy of your credit report a few times each year and monitor your credit history on an ongoing basis.

 

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