How to completely destroy Your Credit Score: Part 1-The Holiday Hangover

How to completely destroy Your Credit Score:  Part 1-The Holiday Hangover

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Daily I have clients with the need to improve their credit scores and raise their FICO. With the holidays here most consumers need to plan ahead to avoid the credit headache over the horizon. Your FICO score is unique to you; however destroying your credit is the same for all. Now don’t get me wrong, if you follow my advice your scores will generally go up; no one can say by how much or how soon though. What I do know is how to ruin your credit and fast.

 

Here are the first 3 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 6oo FICO SCORE is too high and you’d like to lower it a few notches here is what 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.

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 will have negative affects. Depending on when the credit card company reports to the bureaus even balances that you intend to pay off at the end of the month 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 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’re 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 any, close the newest ones first. My advice is to leave a reasonable number of zero balance credit cards open. But we’re talking about lowering a score here, so, I suggest closing all accounts as you pay them off.

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