7 mistakes that drag your credit score down (and how to avoid them)

Your credit score can drop for reasons you would not always suspect. The good news is that most of these mistakes can be corrected. Here are the 7 most common mistakes that pull your file down at Equifax and TransUnion, and above all how to avoid them.

1. Paying your bills late

This is mistake number one. Payment history is the biggest factor in your score, and a payment more than 30 days late can stay on record for years.

How to avoid it:

• Set up pre-authorized payments for your fixed bills.
• Schedule reminders before every due date.
• If the budget is tight, pay at least the minimum on time.

2. Keeping your cards maxed out

Using the full limit on your cards sends a bad signal. Ideally, keep your balance under 35% of the limit.

How to avoid it:

• Make a payment before the statement date to lower the balance that gets reported.
• Spread your spending instead of putting everything on one card.
• Ask for a limit increase only if you will not use it.

3. Closing your oldest accounts

Closing an old card can feel responsible, but it can lower your score. The length of your history and your total available limit both count.

How to avoid it:

• Keep your oldest accounts open, even if you barely use them.
• Run a small transaction through them now and then to keep them active.

4. Piling up credit applications

Every firm application records an inquiry in your file. Several in a short window makes lenders nervous and pulls your score down.

How to avoid it:

• Do not submit several applications at the same time.
• Checking your own file never affects your score.
• Go through a lender who decides in-house: one application, instead of several.

On that note, rather than multiplying attempts, a single credit application with us gives you a clear answer without multiplying inquiries.

5. Ignoring your credit file

Never looking at your file means letting errors, or even fraud, weigh your score down without you knowing.

How to avoid it:

• Get your file for free at least once a year.
• Check for accounts, amounts and inquiries that are not yours.
• In Quebec, Law 25 strengthens your rights: you can request a correction of inaccurate information.

Correcting a single error can sometimes lift your score with no other effort.

6. Co-signing without thinking it through

Co-signing a loan for someone close makes you equally responsible for the debt. If they pay late, it is your score that takes the hit.

How to avoid it:

• Only co-sign if you can carry the payments if you have to.
• Follow the account closely and keep communication open.
• Understand that co-signing is not a simple formality.

7. Leaving accounts in collections

An account sent to collections is one of the most damaging items for your score, and it can stay there a long time.

How to avoid it:

• Settle the situation before an account goes to collections.
• If it already has, negotiate an arrangement and keep proof of payment; grouping your debts through consolidation can keep it from getting that far.
• Fold all of this into a real credit rebuilding plan.

Rebuilding, one good habit at a time

Correcting these mistakes takes consistency, but every step counts toward rebuilding your credit. And there is one concrete lever to speed things up: a well-managed car loan. Every on-time payment is reported to the bureaus and builds a positive history. That is the heart of our second chance credit solutions.

Take action today

However many of these mistakes you recognize in your own path, it is never too late to start again on the right foot. Submit your credit application online: free, no obligation, an answer within 24 hours, whatever your credit situation. Our advisors in the Eastern Townships work with you respectfully and without judgment.