The “How-To Manual” on destroying your credit: Seven Easy Steps to Completely Destroy Your Credit Score:

Seven Easy Steps to Completely Destroy Your Credit Score:

Many people ask me how to improve their credit scores. That is always a difficult question to answer and there is never a guaranteed method. Now, don’t get me wrong, if you follow my advice your scores will generally go up, I just can’t say by how much and how soon. What I do know is how to ruin your credit.

Today I present to you the seven sure ways to ruin your credit score, and believe it or not there is confusion on the best methods to achieving this goal. So, if you feel like your 680 FICO score is too high and you’d like to lower it a few notches here is what you need to do:

1. Miss a monthly payment. I have not measured how fast your score will fall, but all I can say is you can lose almost a hundred points in a very short period of time. One of my past clients called me a few months ago to do a re-finance. When I checked his score it was in the low 600’s. It used to be 720+. In analyzing the report, I saw that only a month prior he had missed a credit card payment and was 30 days late on that account. So, in less than 45 days his score had dropped by almost a hundred points.

2. Max out your credit cards. This one really confuses people. There are two ways the credit scoring model looks at your balance. The first one relates to an individual card. So, if you are maxed on one credit card that is one kind of negative. Depending on when the credit card company reports to the bureaus even balances that you intend to pay off at the end of the moth are vulnerable and your account will appear as being maxed out.

The second negative is in relation to the total credit card lines you have available to you. So, if you have five cards and four have balances greater than 50% of the limit, then you’re in trouble. This is why leaving zero balance cards open is a good thing.

3. Close multiple credit cards and do it fast. It’s okay to close a credit card; however, you have to be careful about how you do it. If you close all five on the same day then the bureaus wonder if you are in some kind of trouble and will give you a negative. Also, you don’t want to close out old credit cards. If you have to close then close the newest ones first. My advice is to leave a reasonable number of zero balance credit cards open. But we are talking about lowering score here, so, I suggest closing all accounts as you pay them off.

4. Shop till the score drops. Now, I know people like choice and like to compare and shop. That is a good thing for most things. However, you don’t want to shop credit cards or mortgage companies till the wee hours of the night. It is okay to look at three mortgage programs, or compare two credit cards. Remember every time you have your score checked it drops by a few points, and that is okay for most people. However, when you have 30 credit inquiries in 90 days that looks very suspicious and your score will hit bottom really quick.

5. Accept all credit offers and open accounts with all of them on the same day. This one is the inverse of point three. This is where you open five credit card accounts on the same day. That means the amount of money available to you increases dramatically and all of a sudden you are a hammer that sees everything as a nail. It is very dangerous to your credit score.

6. More revolving credit than installment loans. If you have sixteen credit cards but only one car payment you are a greater risk. This is because installment loans (such as a car loan) are amortized payments and you will eventually pay it off. However, credit card payments can take years to pay off and can really be a drain on your resources. That is why the proportion is important. Two car loans and three credit cards is all you really need on your report.

7. The 15% off all purchases credit cards. These are the store credit cards you are offered in exchange for 15% off all purchases at the local department store. While the discount is enticing and yours truly has twice been suckered in, the hit on your credit score can be pretty brutal. The reason being is that these cards typically have very low credit limits to start with and if you are doing Christmas shopping you can max it out pretty quick. You don’t even have to max it out, you can reach the 50% level very quick.

So, there you have it, seven easy steps to completely ruin your credit. I cannot promise you that your score will drop by a hundred points overnight. However, I can promise you that taking any of these steps in any combination will drop your score. Feel free to customize these steps for your individual need.