Credit score is a financial term that indicates your creditworthiness and it greatly impacts your eligibility for a loan or a credit card. A good credit score can help people in getting loans quickly and at low interest rates. It basically indicates that you are capable of paying back loans on time. So, to get a jumpstart in the financial world, you should be aware of the things that hurt your credit score the most. Here are some of these factors:

  • Payback history
    Having a habit of not paying your bills on time is one of the things that hurt your credit score the most. If you already own a credit card, you must pay off your EMIs, medical bills, car loan, home loan, phone bills etc. on time. Various credit scoring models have found that almost 35% of your total credit score depends on your payment history.
  • Credit utilization ratio
    Among the things that hurt your credit score the most, this factor should be considered a crucial one. This can be defined as the ratio of the total amount lent by the creditors and the available credit. This factor accounts for 30% of your total credit score. It is advised to keep the ratio below or at 10%, but having a credit utilization ratio of more than 30% can hurt your credit score.
  • Age of credit
    To maintain a healthy credit score, unless urgently required, you must avoid closing your old bank accounts because the banks or financial institutions will consider this factor to calculate your credit score. Accounting for about 10-15% of your credit score, more credit history with timely payments will make you a good borrower. While calculating your credit score, the age of your oldest account and the average age of all your accounts will be taken into consideration.
  • Credit mix
    A poor credit mix is also among the things that hurt your credit score the most. Comprising of almost 10% of the total credit score, this factor depends on two main credit accounts: revolving debt, i.e. credit cards, and installment debt i.e. car/home loans. If you maintain a healthy balance of both credit types, the lenders will see it as a good sign that you can easily handle various credit accounts.
  • Frequent credit requests
    This is yet another factor that will hurt your creditworthiness. If you frequently apply for multiple loans in a short span of a few months, this practice will send a negative message to your lenders. If you keep taking new credits without paying off the earlier ones, your credit score will drop rapidly. To have a healthy credit score, refrain from taking new credits along with an existing loan.

So, these are some of the top things that hurt your credit score the most, and you must keep them in mind at all times. Factors like foreclosure, debt settlement, using only one type of credit account, or canceling a credit card can affect your score as well. All in all, to maintain a healthy credit score, follow the basic financial tips discussed above.