Credit scores can have a large impact on your life. A lower credit score can cause you to get a higher rate on your loan or not get a loan at all. A low credit score can also prevent you from getting a job, especially in the financial industry.

So it is not wise for us to simply ignore our credit score. We need to know our score and understand what helps or hurts it.

Most of us realize that not paying our bills can have a negative impact on our credit score. We miss a payment, and our score goes down.

But what other decisions can quickly hurt your credit score? Here are six that you may have not considered:

1. Apply for a bunch of credit cards. I know, the discount you get at the department store is enticing. But every time you apply for a new card, your credit is reviewed. It is how they determine whether or not you are approved for the card. Excessive pulling of your credit causes you score to go down. So that 10% discount may actually cost you money in the long run.

2. Close a bunch of credit cards. Credit utilization means you have been approved to borrow a certain amount, but have not borrowed that amount. You get a higher credit score for a larger available line of credit, but a lower credit score if you keep an outstanding balance on your card. So when you close a bunch of credit cards, your available credit decreases. And so will your score.

3. Max out your credit card. For the same reasons above. Maxing out your card decreases your available credit, which in turn, decreases your score. Of course, maxing out your credit card can also have other significant financial ramifications (aka debt). So, if at all possible, don’t do it.

4. Settle with your lender. If you have an outstanding debt, you may consider settling with your lender. This means that your lender agrees that you do not have to pay off everything you owe. For some, this may be the best, last resort option. However, the lender will report this to the credit bureaus. And it could potentially have significant negative ramifications for your score.

5. Don’t quickly take care of credit report errors. Mistakes do sometimes appear on credit reports. Someone else’s debt somehow finds its way onto yours. Someone fraudulently uses your information to open new credit card accounts, uses them, and never pays the bill. Immediately report any errors you find on your report. How do you find errors? Regularly check your report. There are plenty of relatively inexpensive services out there that let you see your report.

6. Cosign. Many don’t understand how cosigning works. They think they are just helping a friend or family member out. They view this as a good deed. When you cosign a loan, you are just as responsible for the loan as the other individual. A cosigned loan is your loan. It shows up as your loan on a credit report. And if they miss a payment, your credit report will show that you missed a payment. Keep up with your report. It’s worth it.

My hope for you is that the need to use your credit score is rare. But I also hope that when you do need to use your credit score, it will help and not hurt you. Avoid these six mistakes and take a step toward getting a score that will be a benefit to you.

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Written by Art Rainer, member of the Summit Stewardship and Generosity Ministry Leadership Team.

The Summit offers a variety of stewardship classes to help equip you to become a faithful steward.

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