It is unavoidable: your credit score and fiscal history have a profound impact upon your financial goals and objectives.
With lenders becoming increasingly stringent, having the perfect credit rating in order to be able to enjoy a brighter financial future has become all the more important.
The key is to follow credit card guidelines, and use credit cards in the right way.
As anyone who has suffered from bad credit will tell you, it is far easier to destroy your credit rating than to try and build it up. While building and improving your credit can be a lengthy and arduous task, destroying it is something that can be done in a matter of days.
Fast tracking your way to credit score destruction
While it’s not something that you would intentionally do, there are many things that could result in you fast tracking your way to credit score destruction. Once this has been done, you not only face a bleak financial future but also the long, difficult process of trying to build that score back up.
Sometimes in life, the best way to reach your goal is to know what not to do! So, without further ado, here’s how to destroy your credit score in ten days:
• Day 1: Make late payments on bills and debts: Your credit file and score will take a knock for each late payment that you make on your bills and debts. Also, if you fail to pay the minimum amounts requested on debts such as credit cards, your score will be adversely affected.
• Day 2: Go on a shopping spree and max out your credit cards: maxing out your credit card and not paying them down within the month raises a red flag with regards to your money management abilities. Not only will this result in the increased risk of exceeding your limit, but you can be sure that penalties from your creditors will be soon to follow.
• Day 3: Close down your unused credit accounts: You may feel that if you have credit cards and accounts that you no longer use, you should close them down. However, if you have other debts that you are still paying off, this could damage your debt to credit ratio, thus further damaging your credit score.
• Days 4 and 5: Make multiple applications for credit in a short space of time: Dedicate a couple of days to making applications for one loan or credit card after another, and you will soon see your credit score start to slide. This move will see multiple credit checks being made on your file in a short period of time. The applications will also be listed on your report and will put you into a higher risk category, which will impact negatively on your credit score.
• Day 6: Leave sensitive information out and become the victim of identity theft: If you fail to take proper precautions, you could fall victim to identity theft. This could result in your credit score being lowered without you doing anything at all; the fraudster using your identity will be doing all the hard work for you.
• Day 7: Declare yourself insolvent: From debt management plans and Debt Relief Orders to IVAs and bankruptcy, there are plenty of programmes you can sign up to that will send your credit score plummeting through the floor.
• Day 8: Cancel payments that are due to creditors or service providers: Miss your bill or debt repayments altogether and you will soon see the black marks clocking up on your credit file. Defaults are one of the most common reasons why credit scores slide.
• Day 9: Spend on your debit card and exceed your overdraft limit: If you have a bank overdraft, you need to stay within the specified limit. If you withdraw cash or spend on the card and exceed your limit, you can expect your credit score to take another battering.
• Day 10: Review your hard work: You can now get online, order or view a copy of your credit report, and check out your score. The chances are that it will be considerably lower than when you first started out.
As you can see, sending your credit score crashing through the floor is not a difficult task at all. It is the process of trying to build it back up that will prove time consuming and challenging.
|Written on 11/29/2013 by Phoebe Landon.|
Photo Credit: Philip Taylor