What Lowers Your Credit Score? 5 Common Mistakes to Avoid

Poor Credit Score with young woman using a laptop computer

Do you know your credit score? You should. If you are preparing to purchase a home, car, or take out a personal loan, your score will matter.

But your credit score also follows you to more than just these big financial moments. Things like utility bills, employment prospects, and apartment hunting can all be influenced by credit scores.

Aren’t thrilled about your score? Wondering “why is my credit score low?” Keep reading for five common mistakes that lead to poor scores.

1. Making Late Payments

We know. Life is busy. Most people will accidentally pay something late at least once in their life.

If you slip up, don’t ignore it. Call the company and explain the mistake. Most times one late payment isn’t a big deal, but don’t let it become a pattern.

2. Ignoring Your Credit Report

While average credit scores are hitting new highs ten years after the 2008 financial crisis, not everyone is so lucky.

Even if you aren’t applying for new loans or cards, be sure to check your credit reports. You are entitled to a free report once a year from each of the three reporting agencies.

Immediately report any errors as they could be dragging your score down. Or worse, indicate someone stole your identity.

3. Charging Up to Your Max Credit Limit

A big part of your credit score is determined by a debt utilization ratio. Basically, this is how much credit you are using. If you have a high ration, it will lower your score.

Aim to keep your debt utilization ratio for a card under 30%. If your credit limit is $1,000, keep your balance under $300.

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4. Closing Old Accounts

It’s normal to close accounts like a student or personal loan when you pay them off. But avoid closing credit cards just because you don’t use them.

Closing accounts will lower the amount of credit you have available. This can impact your debt utilization ration mentioned above in a negative way.

Closing old card accounts is also a bad idea because it will decrease the average age of your credit history. The older your history, the better.

5. Avoiding Credit Completely

At this point, you probably think using credit cards and/or loans is just too much hassle. Maybe you think avoiding credit all together is the way to success.


Avoiding credit your entire life will leave you with no reputable history, meaning you will struggle to get a car loan or mortgage.

Start small. Get a credit card and use it for gas or utilities. Just be sure to pay it off each month. You can see options of cards for all levels of credit scores.

Are You Asking “Why Is My Credit Score Low”?

It’s not uncommon to wonder “why is my credit score low.” But it’s important to remember that you do have the power to turn a low score around.

Knowing to avoid some of the most common mistakes listed above will help you achieve all your goals.

If you are looking for other ways to take control of your life, check out this guide on setting self-improvement goals for the new year!

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