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Your FICO® Credit Score, Part 2:

6 things that hurt your credit rating - and how to fix them

If you read Part 1 of this FICO series, you know that your FICO credit score is important, where it comes from, what it means, and how to get your credit reports for free

As a reminder, a higher credit score can benefit you in many ways, including…

  • better interest rates, potentially saving you thousands of dollars over time;
  • lower down-payments; 
  • quicker approval of loans and services, like mobile data plans; and
  • lower car insurance premiums.

Now let’s take a look at the most common problems that hurt your credit score, how you can avoid them, and how to improve your credit rating. 

Problem 1: Credit report errors.

Fixes: Check your credit reports regularly at If you can show there are errors, you should be able to get them removed. To dispute your credit reports, contact the credit bureaus directly:

Tip: if you have old, paid-off credit cards that you don’t use anymore, DON’T cancel them or remove them from your credit history. They can help your debt-to-credit ratio and improve your credit score.

Problem 2: Identity theft.

Fixes: Each time you check your credit report, look carefully for activity that might be fraudulent. Contact the credit bureaus above to ask about any suspicious activity. 

If you think your identity has been stolen, you can place a Fraud Alert with the credit bureaus. Learn more about Fraud Alerts at:

You should also report the fraud to the Federal Trade Commission here:  

To guard against identity theft before it happens, you can “freeze” your credit. Learn more here:  

Problem 3: Missed payments.

Fixes: This is big - missed payments can stay on your credit report for 7 years. The best advice? Don’t miss a payment in the first place. To ensure you pay at least the minimum payment due on time:

  • Set up “auto-pay” from your bank account or credit card.
  • Set up repeating events on your smartphone calendar to remind yourself when payments are due (or when your auto-pay account needs funds to cover bill payments).

If you DO miss a payment:

  • Pay up as soon as possible. 
  • Call the lender and ask for forgiveness of any penalties (but don’t expect to get more than one “free pass”).

Problem 4: Maxed out credit cards.

Fixes: Try using cash instead of credit cards. (If you don’t think a purchase is worth the cash, you shouldn’t put it on a credit card either!)

Pay down credit card debt as much as you can each month, since credit card interest is typically your most expensive debt. 

If you can only partially pay off your credit cards, pay more toward the cards that have the highest interest rate and/or are closest to the credit limit. A lower ratio of debt to available credit can help your credit score.

Do not continually open new credit card accounts to transfer debt; this can lower your credit rating.

Problem 5: Too many different credit applications in a short time.

Fixes: Don’t repeatedly open new credit card accounts simply to transfer debt from one card to another.

Don’t respond to new credit card offers in the mail or at the store checkout register. Multiple applications for different pieces of credit is a red flag to lenders - especially if they occur in a short time period.

However, if you are shopping for a single loan, like a mortgage or car loan, where multiple lenders are running credit checks on you, try to get them ALL done in a short time period. Your credit score won’t be hurt by credit checks for a single loan.

Problem 6: Defaults on loans; foreclosures; bankruptcy.

Fixes: These kinds of problems can stay with you for a long time - 7 to 10 years. But the sooner you address them and start to rebuild a good credit history, the better off you’ll be in the long run. If you are facing major problems like these, seek professional help, using FREE resources like these:

Tip: many companies offer “credit repair” services, but this can be an expensive - and unnecessary - option. Ask for help from the free resources we’ve listed above before contacting a for-profit service.

To sum up:

You should do everything in your power to avoid the problems that hurt your credit rating in the first place. Namely:

  1. Keep your credit card balances low vs. available credit.
  2. Pay your bills on time - and in full, if at all possible.
  3. Check your credit report at least once a year to make sure there are no errors or fraud.

If you do have negative records in your credit history, follow the guidelines we’ve suggested above - and BE PATIENT. Rebuilding your credit score can take time. 

But it’s worth it. If you can improve your FICO® score just one rank (for example, from “fair” to “good”), you could save up to 1% on your interest rates - a significant dollar amount over time. 

Thanks for reading this article; we hope you found it helpful!