Discover the 15 biggest mistakes that damage your credit score—from late payments to closing old accounts. Learn what to avoid and how to protect your credit in 2026.
You can spend months building good credit, only to see your score drop by 100 points because of one mistake.
I learned this the hard way when I accidentally let a $15 bill go to collections (long story involving a moved-without-updating-my-address situation). My credit score dropped from 745 to 655 overnight.
Don't let that happen to you. Here are the 15 biggest credit killers—and how to avoid them.
The 15 Things That Hurt Your Credit Score
1. Late Payments (THE WORST) 💀
Impact: -50 to -150 points per late payment
How late is "late":
- 1-29 days late: Not reported to credit bureaus (you're safe, but pay ASAP!)
- 30+ days late: Reported to bureaus, MAJOR score damage
- 60+ days late: Even worse
- 90+ days late: Catastrophic
How long it stays on your report: 7 years (but impact lessens over time)
Example:
John had a 720 credit score. He forgot to pay his credit card bill and it went 35 days late. His score dropped to 630—a 90-point drop from ONE late payment.
How to avoid:
- Set up autopay for at least the minimum payment
- Use calendar reminders
- Keep a cushion in your checking account
Pro tip: If you realize you're going to be late, call the creditor BEFORE the due date and ask for an extension. They might work with you and avoid reporting it.
2. Maxing Out Your Credit Cards
Impact: -50 to -100 points (depending on how maxed out)
Why it hurts: High credit utilization signals financial distress to lenders.
Example:
Sarah has a $2,000 credit limit and usually carries a $200 balance (10% utilization, score: 740). During the holidays, she maxed out her card at $1,950 (97.5% utilization). Her score dropped to 655—an 85-point drop.
The fix: Pay down your balance! As soon as utilization drops, your score can recover within 1-2 billing cycles.
Safe zones:
- 0-10% utilization: Excellent ✅
- 10-30%: Good ✅
- 30-50%: Fair ⚠️
- 50-90%: Poor ❌
- 90-100%: Very Poor ❌❌
3. Closing Your Oldest Credit Card
Impact: -20 to -50 points
Why it hurts:
- Reduces your average age of accounts
- Lowers your total available credit (increases utilization)
Example:
Maria has three credit cards:
- Card A: 8 years old, $5,000 limit
- Card B: 2 years old, $2,000 limit
- Card C: 1 year old, $1,000 limit
She closes Card A thinking "I don't use it anymore." Her average account age drops from 3.7 years to 1.5 years, and her available credit drops from $8,000 to $3,000. Score drop: 40 points.
What to do instead:
- Keep the card open
- Use it once every 3-6 months for a small purchase
- Set up autopay
- Put it in a drawer if you don't trust yourself
Exception: If the card has a high annual fee ($95+) and you're not using the benefits, closing it might be worth it despite the temporary score drop.
4. Applying for Too Much Credit at Once
Impact: -5 to -10 points per hard inquiry (adds up quickly!)
Why it hurts: Multiple hard inquiries signal desperation for credit.
Example:
Tom applies for 5 credit cards in one week hoping to build credit faster. Each application is a hard inquiry. His score drops 35 points, and he gets denied for most of them because his score dropped!
Safe approach:
- Limit applications to 1-2 per 6 months
- Only apply when you actually need the credit
Exception: Mortgage and auto loan shopping within 14-45 days counts as ONE inquiry (rate shopping is expected).
5. Letting Bills Go to Collections
Impact: -100 to -150 points
How long it stays: 7 years from the date of first delinquency
Common culprits:
- Medical bills (surprise bills you didn't know about)
- Old utility bills from a previous address
- Gym memberships you forgot to cancel
- Library fines (yes, really!)
Example:
Emma moved apartments and forgot to update her address with her internet provider. A $60 final bill went unpaid, was sent to collections, and tanked her score from 710 to 590—a 120-point drop over $60!
How to avoid:
- Update your address everywhere when you move
- Check your credit report regularly
- Set up payment reminders
- Pay BEFORE it goes to collections (even if you're late, pay before 120 days)
If it happens: Negotiate a "pay for delete" (they remove it from your report if you pay).
6. Bankruptcy
Impact: -200 to -240 points
How long it stays:
- Chapter 7 bankruptcy: 10 years
- Chapter 13 bankruptcy: 7 years
Why it's so damaging: It's the ultimate signal that you couldn't repay your debts.
Recovery: You can rebuild after bankruptcy, but it takes 2-4 years to get back to "good" credit.
7. Foreclosure
Impact: -150 to -200 points
How long it stays: 7 years
Similar to: Bankruptcy, but specific to losing your home.
8. Settling a Debt for Less Than You Owe
Impact: -50 to -100 points
Why it hurts: The credit report shows "settled" instead of "paid in full," which signals you didn't honor the full obligation.
Example:
You owe $5,000 on a credit card and negotiate to settle for $3,000. You save $2,000, but your credit report will show "settled for less than owed" for 7 years.
Better option: If possible, pay in full. If not, negotiate a "pay for delete."
9. Having Accounts Charged Off
Impact: -100 to -150 points
What "charge-off" means: The creditor has given up on collecting the debt (usually after 180 days of non-payment).
Important: Even though they've "charged it off," you still owe the money! And it stays on your report for 7 years.
10. Co-Signing a Loan for Someone Who Defaults
Impact: -50 to -150 points (depends on how delinquent)
Why it hurts: When you co-sign, you're equally responsible. If they don't pay, it shows up on YOUR credit report as a missed payment.
Example:
You co-sign a car loan for a friend. They lose their job and stop making payments. The late payments appear on your credit report, and your score drops 90 points—even though it's not your car!
How to avoid: Only co-sign if you're willing and able to make the payments yourself.
11. Not Using Your Credit Cards at All
Impact: -10 to -20 points (minor, but still a factor)
Why it matters: Credit scoring models want to see that you're actively using credit responsibly. If all your cards sit at $0 for months, it doesn't demonstrate credit management.
The sweet spot:
- Use your cards for small purchases monthly
- Pay in full before the due date
- Keep utilization between 1-10%
12. Closing Credit Cards to "Simplify"
Impact: -10 to -40 points
Why it hurts:
- Reduces total available credit (increases utilization)
- Can lower average age of accounts
Example:
You have 4 credit cards with $12,000 total limit and $2,000 in balances (16.7% utilization). You close 2 cards, dropping your limit to $6,000. Now your utilization is 33.3%—over the 30% threshold. Score drops.
Better approach: Keep cards open, use them occasionally, set autopay.
13. Only Making Minimum Payments (While Carrying High Balances)
Impact: Doesn't directly lower your score, but keeps utilization high, which DOES hurt.
Why it's a trap:
- High balances keep utilization high
- Interest accumulates, making it harder to pay down
- You stay in a cycle of high utilization
Example:
$5,000 balance at 18% APR
Minimum payment: $100/month
Time to pay off: 8 years
Total interest paid: $4,300
Meanwhile, your score stays suppressed due to high utilization.
Better approach: Pay MORE than the minimum. Even an extra $50/month makes a huge difference.
14. Ignoring Credit Report Errors
Impact: Varies (could be -50 to -150 points if there are serious errors)
Common errors:
- Accounts that aren't yours
- Payments marked late that were on time
- Duplicate accounts
- Incorrect balances
How common: Studies show 20-25% of credit reports contain errors!
What to do: Check your credit report at AnnualCreditReport.com at least once a year and dispute any errors immediately.
15. Filing for a Short Sale (Real Estate)
Impact: -100 to -150 points
What it is: Selling your home for less than you owe on the mortgage (with lender approval).
How long it stays: 7 years
Why it hurts: Similar to foreclosure, it shows you couldn't fulfill your mortgage obligation.
Things That DON'T Hurt Your Credit Score (Myths Debunked)
❌ MYTH: Checking your own credit score hurts it
✅ TRUTH: Checking your own score is a "soft inquiry" and has ZERO impact. Check as often as you want!
❌ MYTH: Getting denied for credit hurts your score
✅ TRUTH: The hard inquiry hurts (slightly), but the denial itself doesn't.
❌ MYTH: Having a lot of credit cards hurts your score
✅ TRUTH: As long as you're using them responsibly (low utilization, on-time payments), having multiple cards can actually HELP by increasing available credit.
❌ MYTH: Paying off a loan hurts your score
✅ TRUTH: Paying off a loan is good! Your score might dip slightly temporarily because you're losing an active account, but it recovers quickly.
❌ MYTH: Closing collections accounts removes them from your report
✅ TRUTH: Paying a collection doesn't remove it—it just changes the status to "paid." It still stays on your report for 7 years.
How to Recover from Credit Damage
If you've already made one (or more) of these mistakes, here's how to bounce back:
For Late Payments:
- Immediate: Bring the account current ASAP
- Short-term: Set up autopay so it never happens again
- Long-term: Build new positive payment history (the impact lessens over time)
- Optional: Write a goodwill letter asking the creditor to remove the late payment (low success rate, but worth trying)
For High Utilization:
- Immediate: Pay down balances to get under 30% (under 10% is better)
- Quick win: Request a credit limit increase (instant utilization drop)
- Short-term: Pay your credit card multiple times per month
- Long-term: Don't charge more than you can pay off in full
For Collections:
- Immediate: Verify the debt is actually yours (request validation)
- Short-term: Negotiate a "pay for delete" agreement (they remove it if you pay)
- If they won't delete: Pay it anyway and focus on building new positive credit
- Long-term: After 7 years, it automatically falls off your report
For Too Many Inquiries:
- Immediate: Stop applying for credit!
- Short-term: Wait 6 months before any new applications
- Long-term: Inquiries matter less after 12 months and fall off after 24 months
Your Credit Protection Checklist
✅ Set up autopay on all credit accounts (at least for the minimum)
✅ Check your credit report once a year (AnnualCreditReport.com)
✅ Monitor your credit score monthly (Credit Karma, Experian, etc.)
✅ Keep credit utilization under 30% (under 10% is ideal)
✅ Don't close old credit cards
✅ Only apply for credit when you actually need it
✅ Update your address with all creditors when you move
✅ Review bills carefully (don't let small charges go to collections)
✅ Think twice before co-signing
✅ Dispute errors immediately
The Bottom Line
Building credit is hard. Destroying it is easy.
The good news? Now you know exactly what NOT to do. Most credit damage is avoidable if you:
- Pay on time, every time (set up autopay!)
- Keep balances low
- Don't close old accounts
- Only apply for credit when necessary
- Check your credit report regularly
One more thing: If you DO make a mistake, don't panic. Credit can be rebuilt. It just takes time and consistency.
Keep Building (and Protecting) Your Credit
- The Complete Guide to Building Credit in America ← Full strategy
- Understanding Credit Utilization ← Avoid mistake #2
- How to Dispute Credit Report Errors ← Fix mistake #14
Have you made any of these credit mistakes? Share your recovery story in the comments!
Last Updated: January 2026
Post a Comment