Five Ways to Destroy Your Credit Score

During an emergency, credit cards are functional. However, many people have difficulty identifying an "emergency expense." If your car requires an immediate repair, or you need to purchase a last-minute plane ticket, these constitute emergency expenses. Since credit cards make it possible to obtain our "wants" now, it can be difficult to maintain a measure of self-control and fight the urge to use credit for frivolous purchases. Buying merchandise you cannot afford is an assured way to destroy your credit score. Credit ratings can significantly decrease within months - and take years to rebuild.

2. "Keeping up with the Joneses"

Certain people have a bad habit of envying the material possessions that other's have. If their friend or neighbor buys a new vehicle or wide-screen television, they also want the item. Unfortunately, these persons go to extreme lengths to acquire these things, which usually involve financing the high-ticketed item. Creating additional debts can strain your finances. If unable to repay the finance or credit card company, you'll also ruin your good credit rating.

3. Late or Skipped Payments

Several people underrate the importance of mailing timely payments to creditors. Each time a credit card payment and installment loan is late, or not received, your credit score plummets 10 - 15 points. Late or skipped payments are the easiest ways to quickly reduce your credit score. Additionally, creditors charge late fees, which range from $25 - $35.

4. Failure to Check Your Credit Report

Paying your bills on time each month and keeping credit card balances low does not guarantee a good credit score. Credit reporting is not infallible. Therefore, mistakes and errors can occur. A negative remark on your credit report can decrease your score, and make it difficult for you to obtain a home loan or automobile loan. The best way to protect yourself from mistakes is to review your report annually. Highlight and report any mistakes to the three credit bureaus.

5. Failure to Protect Your Identity

Don't assume that identity theft can never happen to you. Instead, take the necessary steps to ensure that you never become a victim. In addition to checking your credit report every 6 - 12 months. Take extra steps to carefully discard financial documents (credit card statements, bank statements, and credit offers.) Use a shredder and mark-out account numbers with a black highlighter. Since many thieves steal mail from mailboxes, stay on the lookout for monthly financial statements. If a credit card or bank statement is not received, contact the creditor immediately.