The Best Ways to Ruin Your Credit Score

A good credit score is more important these days than ever. Not only can you not obtain a loan with favorable terms without one, but employers and rental agencies often require a credit check as well. Your quality of life can depend on your good credit score. A good credit score is easy to get, but equally easy to ruin. Avoid making mistakes that can run your score into the ground.

Mismanage Credit Cards

Credit cards can make your credit score, otherwise known as a FICO score, take a dive if you don't manage them properly. Max out your credit cards and your credit score will take a hit. The amount that you owe the credit card companies should never be close to your maximum line of credit. This is like waving a red flag saying Financial trouble over here.

Your credit score will also suffer if you have too many credit cards. Getting into deep debt affects your score, even if your cards arent maxed out.

Another credit card pitfall is closing accounts too soon. Raise your credit score by keeping longstanding accounts in good standing open. Likewise, take a pass on that 15 percent discount you get for signing up for a new card at that department store you dont shop at very often. Collecting high-interest store cards or closing accounts quickly can both affect your score.

Make Payments Late or Never

If youre concerned about your credit score, it pays to be current on your bills. This includes unexpected payments such as parking tickets, doctor bills and even library fines. Cities commonly turn over unpaid tickets and fines to collection agencies, according to CNN Money. Organize your finances so that you never inadvertently go over the 30-day grace period before companies report a late payment to the credit bureaus. Pay bills early and have money stashed away in a savings account to pay any unexpected expenses. And whatever you do, dont default on a loan. Thats the knell of death for your credit score.

Become a Victim of Identity Theft

Victims of identity theft often struggle with regaining good credit scores after the theft has occurred. Maxed out credit cards, missed payments and more await people who have had their identities stolen. It is difficult make a payment if you dont know that you opened an account. Protect yourself from identity theft by being careful who you give your personal information to. Shred documents containing personal information, keep an eye on your credit card when you hand it over in public, and never give your Social Security number to anyone other than a legitimate employer. Check your credit report at least once a year to make sure that it is clean.

Cosign a Loan

When you cosign a loan, it is a guarantee that you will make payments if the person for whom you are cosigning defaults. People generally do not need cosigners if their credit is in good standing and they have a favorable income-to-debt ratio. Dont let yourself feel pressured into cosigning a loan, even if it is for a good friend or family member. If they default on the loan, you will have to pay it off or face the consequences--collection agents, possible legal action, and a lowered credit score. Cosign a loan only if you have enough money to comfortably pay off the loan should the person default.