Your credit score can be a blessing or a curse, depending on how you handle your finances. Most people don’t realize how much of an impact their personal habits can have on their score. 

Bad money habits can massively affect your credit score. Here are 15 bad habits that could damage your credit score. If you identify with any of them, take steps to correct them.

Below are the 15 Bad habits Can Affect your Credit Score:

1. Missing Your Payment Due Date On Bills And Credit Cards

One of the most important factors in your credit score is your payment history. If you habitually miss your payment due date, it will show up on your credit report and lower your score.  To avoid this, set up automatic payments or reminders so you never miss a payment again.  If you have already missed a payment, make it a priority to catch up as soon as possible.

2. Carrying A High Outstanding On Your Credit Cards

Even if you make all of your credit card payments on time, carrying a high outstanding balance can negatively impact your score. This is because credit utilization, or the amount of credit you are using relative to your credit limit, is a major factor in your score.  To keep your credit utilization low, try to keep your outstanding balances below 30% of your credit limits.  If you have a high balance, consider transferring some of the debt to a low-interest credit card or taking out a personal loan to pay it off.

3. Having Too Many Credit Cards

Applying for new credit cards can be tempting, especially when you’re bombarded with offers of 0% interest for the first year. But every time you apply for a new card, your credit score takes a small hit.  And if you’re constantly applying for new cards, it can signal to lenders that you’re in financial trouble. If you’re trying to improve your credit score, it’s best to limit your credit card applications to once every six months or so.

4. Not Having A Healthy Mix Of Credit

Some good mix categories for credit include: secured credit such as a car loan or a mortgage, unsecured credit such as a credit card, and debt consolidation loans.  If you have a hard time getting approved for a new credit card, consider adding more types of credit to your mix and see if that helps. This way, you’re not relying too heavily on any one type of credit.  

5. Closing Off Old Credit Cards Because You Don't Use Them

It may be tempting to close off old credit cards that you don't use, but this can actually hurt your credit score. This is because your credit utilization is calculated as a percentage of your credit limit. So, if you have a Rs.10 lakh credit limit and a Rs.5 lakh balance, your credit utilization is 50%. But if you close the account, your credit utilization jumps to 100% because your credit limit is now Rs.5 lakh.

6. Not Using Your Credit Cards At All 

It's important to use your credit cards every now and then to keep them active, but you don't want to go overboard and max them out. A good rule of thumb is to keep your credit utilization below 30%. If you have a hard time doing this, consider getting a credit card with a higher credit limit.

7. Co-Signing On Loans

Remember, when you co-sign on a loan, it is reflected on your credit history too. It is counted against your account and hence can affect your credit score. 

8. Paying Off The Wrong Loans First

While it is important to make all of your payments on time, there is another factor to consider when trying to improve your credit score. This is the type of debt that you are carrying. While mortgages and car loans are long term debts and help with your credit score, high interest debts like credit cards and personal loans can negatively affect your score. 

9. Frequently Applying For New Credit

Whether it's a credit card or a personal loan, when you apply to too many of them within a short period of time, your credit score is greatly affected. It is important to have a healthy income to loan ratio if you want to maintain a good credit score. 

10. Lettings Debts Go To Collections 

This is when your debt is so delinquent that the lender sends it to a collection agency to try and recoup the money.  Once your debt is in collections, it will stay on your credit report for seven years, and it will have a major negative impact on your credit score.  If you’re struggling to make your payments, try to work out a payment plan with your lender before it gets to this point.

11. Not Paying Your Taxes Regularly

Taxes are as much a part of your credit score as your credit card bills. It shows your credibility and the commitment to repay your debts timely. 

12. Filing For Bankruptcy

Bankruptcy should always be a last resort.  Before you file for bankruptcy, try to work out a payment plan with your creditors.  You can also try to consolidate your debt or negotiate a settlement.  If you do file for bankruptcy, it will stay on your credit report for seven to ten years.

13. Not Checking Your Credit Report Regularly

It's important to check your credit report regularly to identify any errors or omissions. If you find any, get them fixed in a timely manner. This will help you improve your credit score.

14. You Have Negative Credit Records 

Well, if your credit score is based on your credit history, then a negative record will have a major impact. For example, if you have a credit score of 700 and have a collection account that is six months past due, that account would count as 30% of your total credit utilization, which would lower your score by 50 points.   If you have a credit score of 850 and have a collection account that is one year past due, that account would count as 30% of your total credit utilization, which would lower your score by 70 points.

15. Not Seeking Professional Help When You Know You Need It

There are many credit management services that can help you improve your credit score. They will help you identify the factors that are affecting your score and develop a plan to improve it. They can also negotiate with your creditors to get them to remove negative items from your report.


Credit scores and credit history are important to maintain for many reasons. Credit scores are used to determine the interest rates you'll pay on loans, credit card approval, and even employment opportunities. Credit history is a record of your borrowing and repayment behavior. It's important to keep track of your credit score and credit history so you can identify any potential red flags and take steps to improve your credit health.

FAQs of 15 Bad Habits Can Affect Your Credit Score:

1. What is considered the ideal credit score? 

A score of 700 and above is considered ideal, and can get you the best rates on loans and credit cards. 

2. Where can I find my credit score? 

You can access it from any one of the 4 credit bureaus: Experian, Equifax, TransUnion CIBIL, CIRF Highmark. You can also get it from CreditMantri. 

3. What is the difference between my credit score and credit report? 

Your credit score is a 3-digit number that shows your creditworthiness, while your credit report is a complete history of your credit transactions.  Your credit score is based on your credit history, and it's important to keep track of both your score and your history so you can identify any potential red flags and take steps to improve your credit health.

4. How can I improve my credit score? 

There are a few things you can do to improve your credit score. One is to control your credit utilization ratio to 30% of your available credit. Next is to pay your bills on time. And, to have a healthy credit mix. 

5. How can I get my credit score for free? 

Every individual is entitled to get one free credit score from each of the 4 credit bureaus every year. You have to login to their website, input your credentials, and download your credit score. Or, you can simply visit CreditMantri webpage and get it for free within minutes.