Understanding the Top 7 Credit Score Killers and How to Avoid Them

Your credit score plays a key role in your financial life. It affects your ability to get loans, credit cards, and even housing. Knowing what hurts your credit score helps you make smarter choices and avoid common pitfalls. In 2025, several factors continue to weigh heavily on credit scores. This article breaks down the top seven credit score killers and offers practical advice to protect and improve your credit over time.

Person reviewing credit mistakes on a laptop with credit score gauge dipping

1. Late or Missed Payments and Their Significant Impact

One of the most damaging things you can do to your credit score is miss payments or pay late. Payment history accounts for about 35% of your credit score, making it the single biggest factor.

When you miss a payment, lenders see you as a higher risk. Even one late payment reported to credit bureaus can drop your score by 50 to 100 points, depending on your overall credit profile. The later the payment, the worse the impact.

How to minimize the damage:

• Pay bills on time every month. Set up automatic payments or reminders.

• If you miss a payment, catch up as soon as possible. The longer a payment is late, the more it hurts.

• After a late payment, your score can recover gradually if you maintain consistent on-time payments for several months to years.

  
  

2. High Credit Utilization and the Importance of Balances

Credit utilization is the ratio of your credit card balances to your credit limits. It is a major credit score factor in 2025, making up about 30% of your score.

Using a high percentage of your available credit signals risk to lenders. For example, if you have a $5,000 credit limit and carry a $4,500 balance, your utilization is 90%, which can lower your score significantly.

How to keep utilization in check:

• Aim to keep your credit utilization below 30%, ideally under 10% for the best scores.

• Pay down balances before your statement closing date to reduce reported utilization.

• Avoid maxing out cards, even if you pay them off in full each month.

  
  

3. Collections and Charge-Offs, Including Their Duration on Credit

When debts go unpaid for months, creditors may send them to collections or charge them off. These are serious credit score killers because they show you failed to meet your obligations.

Collections and charge-offs can stay on your credit report for up to seven years, dragging your score down during that time. They signal to lenders that you might not repay debts reliably.

How to handle collections and charge-offs:

• If you receive a collection notice, try to negotiate a payment plan or settlement.

• Pay off collections if possible, as some newer credit scoring models ignore paid collections.

• Regularly check your credit report for errors related to collections and dispute inaccuracies.

  
  

4. Accounts in Default or Repossession

Defaulting on loans or having property repossessed is a major red flag. Defaults and repossessions show lenders you failed to repay secured debts like car loans or mortgages.

These negative marks can stay on your credit report for up to seven years and cause a steep drop in your credit score.

How to reduce the impact:

• Communicate with lenders early if you face financial trouble to explore options like deferment or loan modification.

• Avoid default by making at least minimum payments.

• After a default or repossession, focus on rebuilding credit by making timely payments on other accounts.

  
  

5. Frequent Hard Inquiries and Rapid Credit Applications

Every time you apply for credit, lenders perform a hard inquiry on your credit report. Multiple hard inquiries in a short period can lower your score because they suggest you may be seeking too much credit at once.

Hard inquiries typically stay on your report for two years but only affect your score for about one year.

How to manage hard inquiries:

• Limit new credit applications to when you really need them.

• When shopping for loans like mortgages or auto loans, do so within a short window (usually 14-45 days) so inquiries count as one.

• Monitor your credit report to ensure no unauthorized inquiries appear.

  
  

6. Closing Old Accounts and Its Effect on Credit History

Closing old credit accounts might seem like a good idea, but it can hurt your credit score. Length of credit history makes up about 15% of your credit score, and older accounts help build a longer, stronger history.

When you close an old account, you reduce your overall available credit and shorten your credit history, which can lower your score.

How to avoid this pitfall:

• Keep old accounts open, especially if they have no annual fees.

• Use old cards occasionally to keep them active.

• Consider closing newer accounts instead if you need to reduce the number of cards.

  
  

7. Errors or Inaccurate Reporting That Go Unnoticed

Mistakes on your credit report can unfairly lower your score. These errors might include incorrect late payments, accounts that don’t belong to you, or outdated information.

Many consumers don’t check their credit reports regularly, allowing errors to persist and damage their credit.

How to protect yourself:

• Review your credit reports from the three major bureaus at least once a year.

• Dispute any inaccuracies you find with the credit bureaus.

• Use free tools or services that alert you to changes or suspicious activity on your report.

  
  

Your credit score reflects your financial habits and history. Understanding what lowers credit score helps you avoid common mistakes and build a stronger credit profile. While some setbacks take time to recover from, consistent good habits like paying on time, managing balances, and monitoring your credit can improve your score steadily.

Take control of your credit today by focusing on these key areas and watching your financial opportunities grow.