The importance of credit scores is a fairly new phenomenon. Even in the fairly recent past, credit scores weren't as important as they are today. Regular public education doesn't teach what can help you get a good credit score or what damages it. It's important to understand these negative influences on your score to avoid trouble later on.
- Closing credit cards with balances. When you close a credit card where a balance remains, your credit limit falls to $0. This can cause a big blow to your credit score since it makes it look as though you maxed out your credit card.
- Not enough diversity. Credit scores are partially calculated by you having a mix of credit. If you have only one type of credit account, be it credit cards or loans, it may affect your score. Particularly if you don't have much credit information to begin with, your score can easily be hurt by a lack of diversity.
- Failing to pay bills. Thirty-five percent of your credit score is your payment history. If you are consistently late on your credit card payments, it will hurt your score. Similarly, if you completely ignore your bills, your score will drop very quickly.
- Having an account sent to collections. If you fail to pay a bill for a very long time, no matter the reason, creditors often send it to debt collectors. This means your creditors gave up trying to receive payment and sent your bill to someone else to collect it. This hurts your score.
- Home foreclosure. If your home was foreclosed, this means you got very behind on your mortgage payments, and eventually the lender decided you could not pay. This will not only hurt your credit score but make it harder to get approved for future mortgages.