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The Single Greatest Mistake That Can Drop Credit Scores Over 100 Points

David Warner

David Warner

Financial Advisor

When it comes to your credit score, not only is it incredibly easy to increase your credit score, it’s equivalently easy to decrease your credit score. In many cases, people who are experience a decrease in credit score are so because of lack of awareness or knowledge. In other cases, it’s because they make one fatal mistake that can cost their credit score dearly. In fact, there is one mistake that could be named the single greatest mistake that can, depending on the severity, impact your credit score up to 100 points! In this article, we are going to explore this detrimental mistake and perhaps how to avoid it and move past it. Let’s jump on it!

The Number One Mistake

Do you have any clue as to what the single greatest mistake that can drop score scores over 100 points is? That one mistake that can instantly drop your credit score is paying a bill late or not paying it at all. Any financial guru can agree that this mistake is the worst mistake and the costliest. In fact, FICO has portrayed that credit bureau, Equifax, can tax an individual up to 110 points, given a credit score above 750. If the credit score is lower than the 750 markers, an individual can expect a drop of at least 80 points. Such statistics demonstrate that absolute need to pay bills on time. The truth is, this is a grave and detrimental mistake that may take credit holders months or years to fix.

How to Avoid This Mistake

Before we jump into exploring this mistake a bit more, let’s discuss a few different tips to help avoid this mistake from ever happening. The truth is, many people do not realize there are many options available to you. For example, the best thing you can do to avoid missing a payment or forgetting to pay a bill is to create a payment schedule or calendar. We suggest sitting down once a month, at the start of the month preferably, and create a budgeting game plan. Look at your finances with an open heart and figure out how much money you need to make or set aside each week to ensure all of your bills are paid on time. With a calendar as well, you will never forget when a payment is due. Today, given the digital age, there are even mobile apps and desktop apps that you can set up notifications and reminders with so you are up-to-date with all of your bills. Now, if it’s clear in the beginning of the month that you may be a few days late on a bill, rather than waiting until the last day, give the company a call ahead of time. Chances are, if you can communicate with them the problem in advance, they will honor your honesty and work with you. This will help avoid this mistake in its entirety and the impact on your credit report and score.

The Single Greatest Mistake That Can Drop Credit Scores Over 100 Points

Let’s Discuss Delinquencies

If you have ever missed a payment or failed to pay a bill within 30 days of the scheduled date, chances are, you will get marked with a delinquency. This mark will appear on your credit report and future lenders will see it. Now, here’s the good news, if this is a one-time case, chances are, you can fix it and remove it. To do so, you can file a “goodwill letter”, which is a mere letter to the lending party to request to remove the delinquency at hand. If the lender agrees, it will salvage any damage and protect your credit score. It’s important to know that, in some cases, lenders may not be so inclined to help out.  While this can be discouraging, all this means is that you need to create a new game plan to improve your credit score and credit report health.


Improve Credit Score and Credit Report

Typically, an individual that does not pay their bill on-time is a genuine mistake. The truth is, how many of those reading have tried to pay a car payment with a credit card? Then, when you wake up the next day, you realized that you had a few other payments or charges coming out of your credit card. The moment the payment has begun the processing process – you try to call the credit card company and the car financing company – just to find out there was nothing that could be done right away. It happens! Hopefully in such cases, you will have a car financing company that will offer a minor deferment for the payment – because, the truth is, if you are honest, they understand that mistakes happen. With this example in mind, there are a few different avenues that are available to improve your credit score and credit report.

To get back on track, we highly suggest by ordering a copy of your credit report to start from square one. Review this document and analyze it. Figure out, is there anything to dispute? Disputing your credit report, if there is any mistakes, is a guarantee way to help improve your credit score. Now, if you don’t have anything wrong on your credit report, consider developing a payment plan to begin increasing the amount of money you are putting on a bill. For example, if you are only paying the minimum payment for a credit card, consider adding $20-$50 per month. However, instead of doing it all at once, consider multiple payments through-out the month. This is said to help show credit agencies your dedication and willingness to knock down debt and pay bills on time.


Your Credit Score is Important

Don’t even pass a bill up thinking that your credit score won’t be affected or that it’s not important. Your credit score is important and you must take act and treat it that way. In this article, we provided a wealth of tips and ideas to help prevent credit holders from falling into this trap and dropping their credit score nearly 100 points. While this may be an extreme example, the truth of the matter is, this happens. So, take your credit seriously, get organized, and communicate with lenders when you know there may be a problem.

David Warner

David Warner

Financial Advisor -

David is our in-house financial advisor with years of experience in the credit card industry. He became interested in credit cards after working for several years at a major bank. He holds a Masters Degree in Finance.