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What hurts your credit score: 7 Top Score Killers

You might be surprised by how much one mistake can lower your credit score.

It is not a big mystery that some financial activity will drop your credit score more than other activity — but you may be surprised at what hurts your credit score most.

There is virtually no way to get around credit scores if you want to qualify for credit cards, a mortgage or car loan, rent an apartment, or even get a cell phone.  Your credit score is weaved throughout your everyday life and can sometimes determine your quality of life.

The top secret activity compiled by Fair Isaac Corporation, the people who developed FICO scores, keeps consumers from knowing exactly what complex data, algorithms, and number crunching is involved in the scoring model.

However, Liz Pulliam Weston wrote an article for MSN Money several years ago where she asked FICO to compute how many points a consumer’s score would drop based upon certain actions. The results, although not set in concrete, continue to be relevant. Here are the findings:

1. Bankruptcy

Filing a bankruptcy is a last resort for most consumers and is not an easy decision. The effects of bankruptcy are not forever but it does remain on a credit report for up to 10 years for a Chapter 7 filing and up to 7 years for a Chapter 13 filing.

  • Effect on a 680 score – drop in score by 130-150 points
  • Effect on a 780 score – drop in score by 220-240 points

2. Foreclosure

Nationwide, completed foreclosures have decreased year over year from 39,000 in September 2015 to 36,000 in September 2016, representing a decrease of 69.7 percent from the peak of 118,222 in September 2010 according to Corelogic, a leading provider of consumer, financial and property information. This is the good news. However, consumers experiencing a foreclosure can expect a deep dive in credit scores.

  • Effect on a 680 score – drop in score by 85-105 points
  • Effect on a 780 score – drop in score by 140-160 points

3. Settle debt for less than amount owed

Debt settlement with an original creditor is gaining in popularity but the problem is the missed payments prior to agreeing to settle the debt. Those missed payments knock out your credit score, especially if the score was high. Alternatively, debt settlement with a collection agency may actually increase your score if you are able to negotiate a total deletion from your credit reports in exchange for payment in full.


  • Effect on a 680 score – drop in score by 45-65 points
  • Effect on a 780 score – drop in score by 105-125 points

4. 30-Day Late or Missed Payments

If a credit score is already low there will be a lesser drop because past credit behavior is already factored into the score.

  • Effect on a 680 score – drop in score by 60-80 points
  • Effect on a 780 score – drop in score by 90-110 points

5. Maxing out credit cards

The higher your credit score, the more detrimental a negative action can have on the score. Typically, consumers with less than perfect credit already have particular patterns of credit usage factored into their scores. On the other hand, what happens to consumers with very good credit is quite the opposite. The scoring model views a negative occurrence as a sign the consumer is heading for financial trouble because negative entries on your report are atypical.

  • Effect on a 680 score – drop in score by 10-30 points
  • Effect on a 780 score – drop in score by 25-45 points

6. Loan Modification

Mortgage loan modification is a popular remedy for homeowners facing default and foreclosure. Homeowners can experience a drop in credit scores by as much as 100 points. What’s worse is that some lenders choose to continue to report rolling 30 day late payments to the credit bureaus, especially if the loan modification has a trial period.

7. Balance Transfer

Transferring your credit balances to one card may sound reasonable, especially if that card has a low introductory interest rate. This practice can seriously hurt your credit score as carrying a high balance changes your credit utilization ratio. Fico scoring model calculates the amount owed on an account in comparison to the credit limit. Consumers with a high limit and a high balance to match can expect a big ding to their scores. Keep balances to 10% or less or the available credit limit for better credit scores.

There is good news in light of the above activities that will hurt your credit score. Credit history and credit scores are fluid. A slip up like a late payment can remain on your credit report for seven years but making consecutive on-time payments for several months will raise your score by more than 75 points according to a study by Vantagescore.

Get in the habit of keeping track of your FICO score on a consistent, routine basis for better credit scores. Know where you stand at all times to eliminate surprises. Get your real FICO credit score and report today for $1.00.

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