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Six Ways to Kill Your Credit Score

Somewhere out there in the wild is a credit score with your name on it. It’s wandering the plains, being scoped by employers and lenders, seeing if it makes you worthy of a job or a loan. Perhaps you’ve even seen it, maybe once a year as the government would prefer, or perhaps you’ve just lived blissfully ignorant of what your little score has been doing all by itself. Well today I’m going to tell you six ways you can try to trap your credit score and kill it. I don’t mean hurt it a little, knocking it down a few points, I mean absolutely crush it so that it will be years before it can spread lies about you. I can guarantee that with these tips your credit score will never be the same.

Invariably someone will not recognize the sarcasm in this post so here’s the warning, prominently front and center: This post is a joke. If you do this and tank your score, I am not responsible because I’m telling you right now that by doing these six things you will lower your credit score and endanger your ability to get a loan, job, insurance, or cell phone in the future.

Let’s go credit score hunting!

Go On an App-O-Rama

An app-o-rama is a term I picked up on the Fatwallet Finance forums [3] that goes back many many years. Back in the days of credit card arbitrage [4], you could apply for a lot of 0% balance transfer credit cards [5] in a single day to amass as large a credit limit as possible. The strategy worked because by applying in a single day, there wasn’t enough time to update your credit report. You could be applying for your 12th credit card and your report would look inquiry free. Your credit would be significantly lower once all the inquiries and new credit lines appeared but by then you’d have amassed a ton of credit.

While this strategy probably isn’t as crazy today, it’s certainly a strategy you can use to trash your credit (inquiries account for around 10% of your score) and give you even more power to execute this next way to trash your score.

Go On A Spending Spree

This is by far the easiest way to tank your credit score but it requires that you not only go on a spending spree but fail to pay it back. See, if you go on a spending spree and then pay the balance in full, it won’t hurt your score that much. If you max out your cards, you increase your credit utilization [6] temporarily, which is bad, but it goes back to “normal” once you pay off your debt. You need to max them out and just pay interest, that way the percentage of your total limit is as high as possible.

Kill or Reduce Your Credit Lines

Once you’ve maxed out your credit cards, start asking to have the limits reduced. If you have cards you haven’t maxed out, cancel them. The key here is to get as many of your cards to 100% as possible, so dropping limits after you make the minimum payments is the easiest way to do that (unless you just want to buy more stuff). If you have really old cards that you just don’t like anymore, you can cancel those too. The longer your history, the better your score, so you can nip that in the bud by killing off old cards. It won’t have an immediate effect but it will have one if you wait long enough.

Pay Off Non-Revolving Debt

If you have a car loan, try to pay it off. Student loans? Get rid of them, they’re only helping your score (unless you stop paying, but you want to keep your car right?) because having a good mix of different credit types helps. By having only unsecured revolving credit, like credit cards, you hurt your score by not having a good mix of different types.

Miss A Payment for 60+ Days

Most credit card companies won’t report a missed payment until it’s 60 days late and payment history makes up about 35% of your score. Sixty days can be a long time but if you’re patient it’ll be here sooner than you know it. By missing a few payments, the misses start appearing on your credit report and will lower your score, more so if you’ve been keeping a pretty tight ship before then. If you really want to go all out, just stop paying your bills and eventually they’ll go into collections – which remain on your report for years. Getting something put into collections is probably second only to going bankrupt in terms of “bad” things you can do.

Declare Bankruptcy

This is actually really hard but, if you’re successful, it is the holy grail for credit score trashers. Bankruptcy is hard because you will usually be required to go to counseling beforehand and then there’s the whole bureaucracy aspect of filing the proper documents with the court. You can go for either Chapter 7 or Chapter 13 [7], both will hurt, but Chapter 7 is worse. Chapter 7 is the liquidation variety, where you are forced to sell a bunch of your stuff, but both remain on your credit report for 7 years from filing. They lose their potency after a few years but remain on the list for the seven. Oh, and in an ironic twist, these cost money so remember to budget for it.

There you have it, six ways to kill your credit score. If you have any good tips on hunting down this elusive beast, please share them in the comments!

(Photo: jeffonsafari [8])