The biggest score drags
- Late or missed payments: Payment history is the single largest factor, and being 30, 60, or 90+ days late can cause large, escalating drops; the effect shrinks over time with sustained on-time payments.
- High credit utilization: Using a large share of revolving limits raises risk signals; keeping utilization under 30%30%, and ideally under 10%10%, helps avoid score pressure.
- Recent hard inquiries: Applying for multiple new accounts in a short window can trim points temporarily and signal higher risk.
- Short credit history: A thin or very new file reduces scores since there’s less evidence of responsible borrowing; closing old accounts can shorten average age and ding scores.
- Limited credit mix: Scores can dip slightly if there’s only one type of credit; a healthy mix of installment and revolving accounts can help.
- Collections, charge-offs, and defaults: Serious delinquencies and collection placements are heavy negatives, though their weight lessens as they age.
- Bankruptcies, foreclosures, judgments: Major derogatory public records severely depress scores and can persist for 7–10 years depending on type.
- Maxed-out cards and overlimits: Consistently running near limits signals distress and can cause score drops even without missed payments.
- Rapid new account openings: Multiple new accounts lower average age and create several hard pulls, compounding short-term score pressure.
- Closing credit cards: Reduces total available credit and may shorten credit age, which can increase utilization and shave points.
How long negatives last
Most derogatory items remain for seven years; Chapter 7 bankruptcy can last ten years, while hard inquiries typically affect scores for up to two years with the impact fading sooner. Late-payment damage is front‑loaded—largest initially, then diminishing as new positive history accumulates over months and years.
Fastest ways to stop the slide
- Bring all accounts current and set up autopay to prevent new late marks; payment history drives 35%35% of FICO.
- Pay down revolving balances before statement dates to drop reported utilization, targeting overall under 10%10% where possible.
- Pause new credit applications for a few months; let recent hard pulls age while positive data builds.
- Keep long‑tenured cards open, unless fees outweigh benefits, to preserve average age and capacity.
FAQs
- Do paid collections still hurt scores? Yes, they can remain up to seven years, but newer models may weigh paid collections less; the impact generally declines over time.
- Can paying off a loan lower a score? Sometimes a small, temporary dip occurs if it reduces credit mix, but being debt‑free typically improves overall financial health.
- How many points do inquiries cost? Typically a small, temporary drop; clustered rate‑shopping for certain loans may be treated as one inquiry in many models.
- What utilization is “safe”? Under 30%30% is widely suggested, but under 10%10% more reliably aligns with top‑tier scores.