Common Mistakes That Keep Your Credit Score Low

9 February 2025

When it comes to personal finance, your credit score is kind of like your financial GPA. It tells lenders, landlords, and even some employers how reliable you are when it comes to managing your debt and finances. But here’s the catch: maintaining a good credit score isn’t always as straightforward as you’d think.

Sometimes, you might be making innocent mistakes—stuff you don’t even realize is dragging your score down. Other times, it’s just bad habits that you’ve picked up along the way. Either way, these missteps can keep your credit score in the “meh” zone instead of shooting up into the impressive “wow” territory.

In this blog post, we’re diving into the common mistakes that can keep your credit score low. Spoiler alert: some of these might surprise you. But don’t worry—we’re also going to dish out tips on how to fix them. Let’s jump right in!

Why Does Your Credit Score Even Matter?

Before we get into what drags your score down, let’s take a minute to understand why your credit score is such a big deal.

Think of your credit score as your financial reputation. It’s a three-digit number that gives lenders and creditors a snapshot of how responsible you are with money. The higher your score, the more likely you are to be approved for loans, credit cards, or even an apartment lease. Plus, a good score can snag you lower interest rates, which saves you money in the long run.

On the flip side, a low credit score can mean higher interest rates, smaller credit limits, and even outright rejections. Bottom line? Keeping your credit score in good shape isn’t just a “nice-to-have”—it’s a financial must-have.

Mistake #1: Missing Payments

Let’s start with the obvious: missing payments is a credit score killer. Payment history makes up 35% of your FICO score, so forgetting to pay your credit card bill or loan installment on time is like failing the biggest question on a test.

Even one missed payment can have a big impact, especially if it’s more than 30 days late. Plus, late payments stick around on your credit report for up to seven years. Ouch.

How To Fix It:

Set up autopay or calendar reminders to make sure you never miss a due date again. Not comfortable with autopay? Then at least pay the minimum amount to avoid a late mark on your report.

Mistake #2: Maxing Out Your Credit Cards

It’s easy to think, “Hey, I’ve got a credit limit—might as well use it, right?” Wrong. Maxing out your credit cards—or even getting close to your limit—is a red flag for credit bureaus.

This is because of something called credit utilization, which is how much of your available credit you’re using. For example, if you have a $5,000 limit and your balance is $4,000, your utilization rate is 80%. That’s way too high. Experts recommend keeping your utilization below 30%, but honestly, the lower, the better.

How To Fix It:

Try to pay off your balances as much as possible each month. If paying off the full balance isn’t realistic, focus on chipping away at high-interest debts first.

Mistake #3: Closing Old Credit Cards

I get it—closing an old credit card might seem like a good idea, especially if you’re no longer using it. But here’s the problem: closing a card can lower your credit age, which is the average length of time your accounts have been open. Credit age is a factor in your score, so cutting ties with an old card could hurt you.

How To Fix It:

If the card doesn’t cost you an annual fee, keep it open! You don’t necessarily have to use it, but letting it sit there can help maintain your credit history.

Mistake #4: Applying for Too Much Credit at Once

Ever heard the saying, “Slow and steady wins the race?” It applies to your credit score too. When you apply for multiple credit cards or loans in a short period, lenders see this as a sign of financial distress.

Every time you apply for new credit, a hard inquiry shows up on your credit report, and too many of these can temporarily lower your score. The keyword here is “temporarily,” but if you’re already struggling with your score, it’s just extra weight you don’t need.

How To Fix It:

Be strategic about when and why you apply for new credit. Space out your applications, and only apply for credit when you truly need it.

Mistake #5: Ignoring Your Credit Report

This one’s sneaky. Sometimes, your credit score is low because of errors on your report—things like incorrect balances or even accounts that don’t belong to you. Identity theft or simple mistakes can wreak havoc on your score if you’re not paying attention.

How To Fix It:

Check your credit report regularly. You’re entitled to a free credit report from each of the three major bureaus (Equifax, Experian, TransUnion) once a year at AnnualCreditReport.com. Spot a mistake? Dispute it immediately to get it corrected.

Mistake #6: Only Making Minimum Payments

Okay, let’s be real: paying only the minimum on your credit card bills feels like you’re doing the bare minimum to stay afloat. And technically, you are. But carrying a balance month after month means paying more in interest—and it could also hurt your credit utilization.

The longer your balance lingers, the higher your utilization ratio gets, putting downward pressure on your score.

How To Fix It:

Whenever possible, pay more than the minimum amount due. Even an extra $20 or $50 a month can make a big difference over time.

Mistake #7: Forgetting About Small Bills

Ever let a $20 medical bill or a small utility payment slip through the cracks? It might seem like no big deal, but unpaid bills can be sent to collections, which is a massive red flag for your credit report.

Even a small account in collections can cause significant damage to your score, making it harder to climb back up.

How To Fix It:

Treat every bill, no matter how small, like it’s a VIP. If you’re prone to forgetting, set up payment reminders or consolidate your bills where possible.

Mistake #8: Co-Signing Loans Without Thinking It Through

Co-signing a loan for a friend or family member might seem like a kind gesture, but it comes with risks. If the person you co-signed for misses payments or defaults on the loan, it’ll reflect on your credit report too.

How To Fix It:

Think long and hard before agreeing to co-sign. Make sure the person is financially responsible, and have an honest conversation about their repayment plan before putting your name on the dotted line.

Mistake #9: Not Having Any Credit at All

Believe it or not, having no credit can be just as bad as having bad credit. If you’ve never used a credit card or taken out a loan, there’s no data for lenders to assess your reliability. It’s like trying to get hired for a job without any work experience—it’s tough.

How To Fix It:

Start small. Consider a secured credit card, which requires a cash deposit, or become an authorized user on a family member’s card. Use credit responsibly to build a positive track record over time.

Mistake #10: Forgetting to Update Personal Information

Did you move recently and forget to update your address with creditors? Or maybe you switched bank accounts and forgot to change your autopay settings? These seemingly small details can lead to missed payments or lost correspondence—both of which can hurt your score.

How To Fix It:

Keep your personal info up-to-date everywhere. It’s a simple step that can save you a ton of headaches and protect your credit score.

Final Thoughts

Your credit score isn’t just a number—it’s a reflection of your financial habits. The good news? If your score isn’t where you want it to be, you can take steps to improve it. Avoiding these common mistakes is a great place to start.

Remember, building good credit takes time, consistency, and a little bit of know-how. But once you get the hang of it, your financial “GPA” will thank you.