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8 Things That Will Kill Your Credit

Written by Kristie McCauley

    Make no mistake about it, you need good or even great credit to get anywhere in the financial department these days.

    Want to buy a car?

    You better have great credit (If you don’t want to drive a jalopy or pay out the nose in interest.).

    Want to buy a house?

    You better have exceptional credit (or the mortgage company isn’t going to even consider your application).

    If you have good (or even great) credit then you want to stay on the path to keeping it good (or great). So, here’s eight8 ways to help you prevent you from killing your credit.

    1. Collections

    When you go delinquent on paying your medical bills, contractual obligations, and a host of other types of debts, the creditor or company you owe sends your account to a collection agency.

    Collection accounts show up on your credit report and can really ding your credit score. Here’s the real kicker. Even if you pay off an account in collection, it still shows up on your credit report and it can still hurt your credit.

    So, the moral of the story, kids, is don’t let your credit accounts go to collection.

    2. Library Fines

    So, let me get this straight. You save money by borrowing books and DVDs from the library, but then you rack up fines for not returning those items by the due date? That $4.50 library fine might seem laughable, but some libraries are reporting long-outstanding fines to the credit bureaus.

    So, borrow responsibly. Patronize your local library, but make sure you return your borrowed items by their due date. And, if you don’t, pay your fine.

    3. Credit Cards

    This one may seem counterintuitive, but NOT having credit cards can actually kill your credit. Credit-killing prevention comes with the responsible use of credit card accounts attached. It can (and does) boost your credit score when you have credit card accounts that you use and pay off on a regular basis.

    Having and using credit credits and other types of credit accounts is what builds your credit history. If you don’t have credit cards or credit accounts, then you have no credit history, so you are killing your credit.

    There, I said it, get some credit cards, use them, and pay them off.

    4. Closing Old/Unused Accounts

    That gas card or department store card has been sitting in your wallet for the last couple of years. You figure you should just close it. You’re not using it anyway.


    Closing accounts that have a long history can kill your credit. One of the calculations that goes into your credit score is the length of the relationship you have with a creditor. The longer your relationship is, the better.

    5. Applying for Any Type of Credit

    Try to avoid going on a wild credit account opening spree. I said open up some accounts and use them, but let’s not get crazy here. Try to mix up your credit accounts so you have different types (auto loan, gas card, department store card, major credit card, student loan, mortgage, etc.).

    You don’t want to be too heavy on any one type of credit because it can hurt your credit rather than help it.

    6. Medical Bills

    It’s no secret that the rising cost of healthcare in America puts a ton of Americans in a bad financial spot. One stop in the emergency room can rack up thousands of dollars of medical bills. If you don’t have the money to cover those bills, walking away might seem like an option.

    It’s an option that’ll quickly kill your credit. So, pay those medical bills. Contact the hospital or doctor’s office to work out a payment arrangement. Most would rather have you pay a little at a time than not pay the bill at all so they are willing to work with you.

    This happened to me. At the time, I was self-employed and had a health insurance policy that didn’t cover an emergency room visit because the hospital was not in my network (or something like that). I worked out a payment arrangement with the hospital. They asked me how much I could afford to pay per month and that is what I paid until the bill was paid in full.

    7. Credit Pulls

    Everyone knows that when you apply for credit the creditor pulls your credit report. What you may or may not know is that every time your credit report is pulled, it shows as a credit inquiry on your credit report. Too many inquiries can look bad to creditors and cause you some credit problems.

    Another reason to refer back to #5 and not go on a credit account opening spree.

    The exception to this is if you apply for the same type of credit in a short time period. For example, if you’re applying for a mortgage because you’re buying a home, you might apply with two or three different lenders. If you do this during a two-week period, then it doesn’t hurt your credit.

    If you apply for a mortgage, an auto loan, and a credit card all in the same week, well, I think you know how that ends.

    8. Real Estate & Federal Taxes

    While it is a real bummer to have to pay taxes on your real estate or to the Federal Government, it is a must. If you don’t pay your real estate taxes or your taxes to the IRS, your local tax authorities can (and will) put a tax lien on your property. The IRS can also put a tax lien on you and both types of liens show up on your credit.

    You can avoid a lot of headaches and hassle by paying your real estate and federal taxes. It keeps the liens away and keeps your credit score from dying a pretty severe death.

    Preventing the death of your credit should be pretty high on your priority list. After all, credit can make or break your financial world.

    What unexpected thing killed your credit?

About the author

Kristie McCauley

Kristie Lorette McCauley is an award-winning expert on personal finance, mortgages, and credit. She has published articles on major finance and credit blogs, such as Yahoo! Finance, Quizzle, Money Crashers, and BankRate. She is also the author of books, such as How to Use the Equity in Your Home or Business Today to Invest for Tomorrow and How to Open & Operate a Financially Successful Personal Financial Planning Business.

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