3. Make your Payments

The quickest way to lower your credit score is to not Make Your Payments.

The question is "What happens when you miss a payment?"  

Once you are over 30 days late on a payment the bank or credit card company will report the late payment to the three credit bureaus.  

You now have a fresh negative in your credit history.  If your credit history is relatively young, less than three years old on average it could knock up to 100 points off your credit score.

Your payment history is one of the most important factors in determining your credit score, and a missed payment will stay on your credit report for up to seven years.  As the missed payment ages it will have less effect on your score if you do not miss another payment.

What are the Costs of Bad Credit?

Expenses and Issues you will have with Bad Credit.

• That job you applied for may hire someone else.  Many employers, especially for higher paying jobs will check your credit score before offering you a job.  

• That apartment you wanted will rent it to someone with a higher credit score.  Your credit score is an indication of how likely you are to be late on paying your rent.

• You will have to pay a deposit when you sign up for utilities.  

• You will have to put a significant amount down when you get a new cell phone.

• You will be turned down for the car loan.  Or if you do get a loan the interest rate will be significantly higher with bad credit.   

Example $10,000 loan, 4 years, 5% interest, payment $230 payment. $1054 paid in interest over 4 years.  

Example 2 $10,000 loan, 4 years, 18% interest, payment $294 payment. $4100 paid in interest over 4 years.

• You will have to put up a much larger down payment to get a car loan.

• You will only be able to get secure or low quality credit cards.  No cash back or airline cards for you with a low credit score.

• Higher insurance rates.  Many insurance companies check your credit to determine your rate.  You will not even realize you are paying higher car, homeowners, or renters insurance but your bad credit is costing you.

• Problems with personal relationships.  Sharing finances with a partner when you have bad credit can cause problems.  

There are a lot of negative impacts, some you do not even realize are caused by bad credit.  However they cost you just the same.