5 ways you’re hurting your credit score

 October 1, 2018
How Student Loan Hero Gets Paid

How Student Loan Hero Gets Paid

Student Loan Hero is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). Student Loan Hero does not include all lenders, savings products, or loan options available in the marketplace.

Advertiser Disclosure

Student Loan Hero Advertiser Disclosure

Student Loan Hero is an advertising-supported comparison service. The site features products from our partners as well as institutions which are not advertising partners. While we make an effort to include the best deals available to the general public, we make no warranty that such information represents all available products.

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been reviewed, commissioned or otherwise endorsed by any of our network partners.

credit scores
Logo

We’ve got your back! Student Loan Hero is a completely free website 100% focused on helping student loan borrowers get the answers they need. Read more

How do we make money? It’s actually pretty simple. If you choose to check out and become a customer of any of the loan providers featured on our site, we get compensated for sending you their way. This helps pay for our amazing staff of writers (many of which are paying back student loans of their own!).

Bottom line: We’re here for you. So please learn all you can, email us with any questions, and feel free to visit or not visit any of the loan providers on our site. Read less

Sometimes we spend so much time trying to boost our credit score that we don’t realize that we might be hurting it instead.

Your credit score is typically made up of a few different parts, including:

  • Payment history: 35 percent.
  • Amounts owed (or credit utilization): 30 percent.
  • Length of history: 15 percent.
  • Types of credit: 10 percent.
  • New credit: 10 percent.

While each part can impact your score differently, it’s important to pay attention to all of them. Here are some ways you could be hurting your score instead of helping it.

1. Not checking your credit report

While your score is a three-digit number that shows your creditworthiness, it’s your credit report that details your credit responsibility.

Your report is a detailed history of your credit since you began your credit journey. For some, it starts with student loans. For others, it could be a credit card.

You can get a free credit report from each of the three major credit bureaus — Equifax, Experian and TransUnion — once every 12 months to see if there are any red flags or errors. You can also get your credit report for free from Bankrate.

Similarly, not checking your credit score often to evaluate how you’re doing can also hurt you. Chelsea Hudson, personal finance expert at TopCashback.com, says it’s good to review your score and report to take care of any discrepancies.

“I always recommend checking your credit report every few months to access your purchasing habits and double-checking to make sure your information is correct to guard yourself against identity theft,” Hudson says.

2. Only making minimum payments

If you’re constantly hitting your credit limit, you become a liability to lenders. Consumer savings expert Andrea Woroch says you should never use more than 30 percent of your total balance across all credit cards, otherwise known as your credit utilization.

“Those who keep their utilization percentage low typically have higher scores than those who max out their credit cards constantly,” she says. “Maintaining a low balance will not only help you manage timely payments, but it also helps your credit score.”

If you’re constantly paying with your credit card and carrying a balance every month, you’re not only accruing interest, you’re keeping your credit utilization high. Once you go beyond 30 percent utilization, Woroch says your credit score can take a dip.

3. Paying bills late

Regardless of what bills you have, missing payments can crush your credit score.

“Those who constantly pay late show poor money management skills and this signals a risk to potential creditors,” Woroch says. “While many utility providers may not report the occasional late payment, those who regularly pay late face serious implications when it comes to their credit score.”

Payment history makes up 35 percent of your credit score. Late or missed payments may cause a huge drop.

“When you miss a payment, you are viewed as an unreliable borrower,” Hudson says. “Not only will your credit score and history be impacted, but you’ll also be subjected to higher interest rates.”

4. Opening and closing accounts

Perhaps a while back you opened a rewards credit card for the attractive signup bonus, but now you want to close the account. Consider this before doing so.

In addition to opening many different accounts at once, closing accounts could hurt your credit score, too.

“Closing old cards with great history is not a good strategy,” says Aris Jerahian from Orange County’s Credit Union. “It indicates you are no longer demonstrating management of that credit line which could have a negative impact on your credit line.”

The length of your credit history accounts for about 15 percent of your overall credit score. The longer your history, the better your creditworthiness is.

Additionally, opening an account can cause a temporary dip in your credit score due to hard inquiries, which are a part of the new credit component of your credit score. Hudson advises against applying for many different accounts, which can completely tank your score.

“You want to limit as many hard inquiries as possible since they do affect your credit score,” she says. “Although hard inquiries are only 10 percent of your credit score, it can make the difference between a perfect score and a good score.”

5. Avoiding credit entirely

If you’re trying to give your credit score a boost, you might think not using credit at all will show how responsible you are. But it actually has the opposite effect.

“Some people think they are doing (their) credit scores a favor by not borrowing or charging anything,” says Freddie Huynh from Freedom Financial Network. “Credit agencies rely on past payment history to gauge how borrowers will do in the future. If you don’t borrow, they have no information to rely on.”

If you don’t use credit at all, you might be credit invisible. This is where you don’t have enough of a credit history to generate a score. This can create challenges — if you don’t have a credit history, lenders can’t trust your creditworthiness.

There are plenty of ways to use credit responsibly, from credit cards to loans. As long as you’re paying your bills on time, in full every month, you’re on your way to a great credit score.

This article originally appeared on Bankrate.com and was written by Dori Zinn.

Interested in a personal loan?

Here are the top personal loan lenders of 2022!
LenderAPR RangeLoan Amount 
6.99% – 22.23%1$5,000 - $100,000

Visit SoFi

4.37% – 35.99%$1,000 - $50,000

Visit Upstart

5.94% – 35.97%*$1,000 - $50,000

Visit Upgrade

99.00% – 199.00%2$500 - $4,000

Visit OppLoans

5.99% – 24.99%3$5,000 - $40,000

Visit Happy Money

7.99% – 20.88%4$5,000 - $50,000

Visit Citizens

9.99% – 35.99%5$2,000 - $36,500

Visit LendingPoint

10.68% – 35.89%6$1,000 - $40,000

Visit LendingClub

9.95% – 35.99%7$2,000 - $35,000

Visit Avant

1 Includes AutoPay discount. Important Disclosures for SoFi.

SoFi Disclosures

Fixed rates from 6.99% APR to 22.23% APR APR reflect the 0.25% autopay discount and a 0.25% direct deposit discount. SoFi rate ranges are current as of 6/15/22 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. Lowest rates reserved for the most creditworthy borrowers. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, income, and other factors. See APR examples and terms. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.


2 Includes AutoPay discount. Important Disclosures for Opploans.

Opploans Disclosures

Direct Deposit required for payroll.

Opploans currently operates in these states: . *Approval may take longer if additional verification documents are requested. Not all loan requests are approved. Approval and loan terms vary based on credit determination and state law. Applications processed and approved before 7:30 p.m. ET Monday-Friday are typically funded the next business day.

  1. To qualify, a borrower must (i) be a U.S. citizen or permanent resident; (ii) reside in a state where OppLoans operates; (iii) have direct deposit; (iv) meet income requirements; (v) be 18 years of age (19 in Alabama); and, (vi) meet verification standards.
  2. NV Residents: The use of high-interest loans services should be used for short-term financial needs only and not as a long-term financial solution. Customers with credit difficulties should seek credit counseling before entering into any loan transaction.

  3. OppLoans performs no credit checks through the three major credit bureaus Experian, Equifax, or TransUnion. Applicants’ credit scores are provided by Clarity Services, Inc., a credit reporting agency.

  4. Based on customer service ratings on Google and Facebook. Testimonials reflect the individual’s opinion and may not be illustrative of all individual experiences with OppLoans. Check loan reviews.

  5. Rates and terms vary by state.


3 Includes AutoPay discount. Important Disclosures for Happy Money.

Happy Money Disclosures

  1. All loans are subject to credit review and approval. Your actual rate depends upon credit score, loan amount, loan term, credit usage and history. Currently loans are not offered in: MA, MS, NE, NV, OH, and WV.

4 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  1. Rates and offer subject to change. All accounts, loans and services subject to individual approval.
  2. Loyalty Discount: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower has a qualifying account in existence with us at the time the borrower has submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, student loans or other personal loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI and VT. This discount will be reflected in the interest rate and Annual Percentage Rate (APR) disclosed in the Truth-In-Lending Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan, and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  3. Automatic Payment Discount: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their Citizens Bank Personal Loan during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account two or more times within any 12-month period, the borrower will no longer be eligible for this discount.

5 Important Disclosures for LendingPoint.

LendingPoint Disclosures

Applications submitted on this website may be funded by one of several lenders, including: FinWise Bank, a Utah-chartered bank, Member FDIC; Coastal Community Bank, Member FDIC; and LendingPoint, a licensed lender in certain states. Loan approval is not guaranteed. Actual loan offers and loan amounts, terms and annual percentage rates (“APR”) may vary based upon LendingPoint’s proprietary scoring and underwriting system’s review of your credit, financial condition, other factors, and supporting documents or information you provide. Origination or other fees from 0% to 7% may apply depending upon your state of residence. Upon final underwriting approval to fund a loan, said funds are often sent via ACH the next non-holiday business day. Loans are offered from $2,000 to $36,500, at rates ranging from 7.99% to 35.99% APR, with terms from 24 to 60 months. Minimum loan amounts apply in Georgia, $3,500; Colorado, $3,001; and Hawaii, $1,500. For a well-qualified customer, a $10,000 loan for a period of 48 months with an APR of 24.34% and origination fee of 7% will have a payment of $327.89 per month. (Actual terms and rate depend on credit history, income, and other factors.) The $15,575.04 total amount due under the loan terms provided as an example in this disclaimer includes the origination fee financed in addition to the loan amount. Customers may have the option to deduct the origination fee from the disbursed loan amount if desired. If the origination fee is added to the financed amount, interest is charged on the full principal amount. The total amount due is the total amount of the loan you will have paid after you have made all payments as scheduled.


6 Important Disclosures for LendingClub.

LendingClub Disclosures

All loans made by WebBank, Member FDIC. Your actual rate depends upon credit score, loan amount, loan term, and credit usage and history. The APR ranges from 10.68% to 35.89%. For example, you could receive a loan of $6,000 with an interest rate of 9.56% and a 5.00% origination fee of $300 for an APR of 13.11%. In this example, you will receive $5,700 and will make 36 monthly payments of $192.37. The total amount repayable will be $6,925.32. Your APR will be determined based on your credit at time of application. The origination fee ranges from 2% to 6% (average is 4.86% as of 7/1/2019 – 9/30/2019). In Georgia, the minimum loan amount is $3,025. In Massachusetts, the minimum loan amount is $6,001 if your APR is greater than 12%. There is no down payment and there is never a prepayment penalty. Closing of your loan is contingent upon your agreement of all the required agreements and disclosures on the www.lendingclub.com website. All loans via LendingClub have a minimum repayment term of 36 months or longer.


7 Important Disclosures for Avant.

Avant Disclosures

*If approved, the actual loan terms that a customer qualifies for may vary based on credit determination, state law, and other factors. Minimum loan amounts vary by state.

**Example: A $5,700 loan with an administration fee of 4.75% and an amount financed of $5,429.25, repayable in 36 monthly installments, would have an APR of 29.95% and monthly payments of $230.33.

Based on the responses from 7,302 customers in a survey of 140,258 newly funded customers, conducted from August 1, 2018 – August 1, 2019, 95.11% of customers stated that they were either extremely satisfied or satisfied with Avant. 4/5 Customers would recommend us. Avant branded credit products are issued by WebBank, member FDIC.


* Important Disclosures for Upgrade Bank.

Upgrade Bank Disclosures

Personal loans made through Upgrade feature APRs of 5.94%-35.97%. All personal loans have a 2.9% to 8% origination fee, which is deducted from the loan proceeds. Lowest rates require Autopay and paying off a portion of existing debt directly. For example, if you receive a $10,000 loan with a 36-month term and a 17.98% APR (which includes a 14.32% yearly interest rate and a 5% one-time origination fee), you would receive $9,500 in your account and would have a required monthly payment of $343.33. Over the life of the loan, your payments would total $12,359.97. The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, credit usage history, loan term, and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early. Accept your loan offer and your funds will be sent to your bank or designated account within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes the transaction. From the time of approval, funds should be available within four (4) business days. Funds sent directly to pay off your creditors may take up to 2 weeks to clear, depending on the creditor. Personal loans issued by Upgrade’s lending partners. Information on Upgrade’s lending partners can be found at https://www.upgrade.com/lending-partners/.