Raising your credit score is not always an easy task. It is much, much easier to lower your credit score. Of course, if you know how to lower your credit score, you are also armed with the knowledge of how to avoid those actions that would lower your score, and with the credit market the way it is today, it is far easier to keep your credit score from dropping further than it is to raise it, and this is likely to be the case until the credit market loosens up again. So here are the best and fastest ways to lower your credit score.
*Max out your credit cards
Since a portion of your credit rating is based upon the ratio of credit limits to how much you are actually using, if you use too much, your score will drop. If you can, you will want to keep your usage to less than 30% if you don’t want your score to drop. However, this is not always easy, as many credit card companies are dropping credit limits as fast as people can pay them down, thereby falsely dropping credit ratings on even the most credit worthy customers.
*Default on your credit cards
If you’ve racked up debt, and you find that you can no longer pay the bills, it will lower your credit score. Even late payments are going to lower your score, so make sure that you keep this in mind when you are thinking about not paying. It may be frustrating that the bank keeps lowering your credit limit as soon as you have anything paid off, but remember that defaulting on your credit card will hurt your credit even more than having your cards maxed out.
*Let your car be repossessed
This will drop your score by as much as 100 points almost instantly. For some people, this becomes a necessary step, if they cannot afford the payments. However, do not take this step unless you are prepared to have a very poor credit rating. Of course, most people do not let their car loans go into default if they can avoid it. If you have to take this step, make sure that you are prepared to pay cash for cars for a very long time, even if that means that you have to settle for beater cars.
*Allow your home to go into foreclosure
This is probably the worst thing you can do for your credit is to put a foreclosure on your record. This can make it difficult to ever get a home loan again. There are many people who have no choice but to do this, especially in today’s economy, but it is best to avoid it if at all possible.
*File for bankruptcy
If you have done all of the above, and you are still falling behind in your bills, you may have no choice but to file for bankruptcy. This is a drastic step, and will lower your credit rating, close to as low as it can go. However, just remember that once you have hit that bottom point, there is no way to go but up, and bankruptcy will make it easier to go back up.
The good news is that if you follow the opposite of these steps, you will actually raise your credit score. If you cannot help but take these steps and your credit does hit rock bottom, you can still start over again and rebuild your life and your credit better than ever before. Just make sure that from that point on, you never buy anything that you do not have the cash to pay for, and you will be better off in the long run.