Things That Negatively Affect Your Credit Score

A good to excellent credit score is critical in order to create financial stability or build future borrowing power. Excellent credit can get you into a car lease with little down or put you at the head of the list of a sought-after apartment or condo for lease. Credit scores are a complex set of statistical factors that determine the likelihood an individual will pay back the money he has borrowed. Several things on a credit report can negatively impact a credit score.

Late Payments

Late payments, collection agency attempts and personal bankruptcies can have the greatest negative effect on a consumer's credit score, according to Trans Union. Late payments are generally defined as being more than 30 days past due, but some banks may still report a missed payment fewer than 30 days late to a credit reporting agency depending upon the terms of your loan or account. Pay your bills on time to help raise your credit score.

High Balances On Your Credit Lines

If you are using more than 35 percent of your available credit, you can expect to see your credit score negatively impacted. Keep your credit card and loan balances as low as possible; many lenders would like you to stay close to the minimum available credit on your line or card to have the best credit score. Don't max out your credit cards; that can also hurt your score. Keep your balances low by making a payment right after making the purchase; you don't have to wait until the bill arrives in the mail.

Closing Credit Card Accounts

Contrary to what you may think, cutting up your credit cards and closing your accounts can drop your credit score, especially if you close an account that you have had for a long time. That's because the longer you can show you have paid your bills on time and have been responsible with your credit, the better it looks on your credit report. You can improve your score by keep the oldest account on your credit report open and by using it wisely.

Excessive Inquiries

Too many inquiries attached to your credit report can impact your score, albeit in a relatively small way, according to Experian. Only credit applications that the consumer applies for can tick the score lower; inquiries made by your lenders or credit accounts for periodic review of your credit cannot. Inquiries are never the reason for truly poor credit, but when taking other factors into account, such as extremely high debt or low scores, they can make a negative impact.