Managing Money

5 Credit Card Moves That Can Lower Your Credit Score

5 Credit Card Moves That Can Lower Your Credit Score
Written by Deb Hipp

Don’t make these credit card mistakes if you want to keep or improve your good credit.

More than 90% of Americans have at least one credit card, and the average American has a credit card balance of around $5,300, according to credit card resource ValuePenguin. Many Americans have multiple credit cards, which can be beneficial to your credit score if you pay on time and keep all cards’ balances well below the credit limit – or even better, paid in full by each statement due date.

For all their convenience, however, having credit cards can also lead to credit score woes if you don’t stay on top of factors that can drop your score.

1. Paying late

When money is tight, you might think that paying late or missing a payment or two and catching up later is a way to juggle your monthly expenses. However, paying late or missing a payment on a credit card is one of the biggest mistakes you can make if you want to maintain or improve your credit score.

That’s because payment history is the biggest factor in calculating your credit score, accounting for 35% of the score. So how much can paying late lower your score? According to FICO, missing one payment by 30 days can lower your credit score from 40 to 80 points. Miss a payment by 90 days, and your score could drop as much as 100 points, depending on your credit history and current credit standing.

2. Maxing out credit cards

Another major factor in calculating your credit score is your credit utilization ratio, which is the percentage of revolving credit to your available credit. Credit utilization comprises 30% of your credit score, and major credit bureau Experian recommends keeping your credit utilization rate below 30% for a higher credit score.

For example, if your total available credit on all your credit cards is $10,000 and your credit card balances totaled $5,000, your credit utilization ratio would be 50%. In that scenario, you would need to keep your total credit card balances at $3,000 or below to not exceed a 30% credit utilization rate.

3. Applying for multiple cards in a short period

Having multiple cards can help your credit score by establishing more accounts to add to your credit history, as long as you pay on time. But applying for several credit cards at once in hopes of building a better credit score may backfire, dropping your score instead. That’s because when you apply for a credit card, the credit card issuer pulls your credit report, which is considered a “hard inquiry.” Multiple hard inquiries can lower your credit score temporarily.

4. Closing an old account

If you haven’t used a credit card for years, you may think that canceling the card and closing the account is a good idea, since that’s one less account to worry about. However, the problem with closing an older account is that no longer having the account on your credit report may lower your credit score, since long-standing accounts are good for your credit history and credit score. 

You’re better off keeping older credit card accounts open, even if you never use the card, since the zero balance and available credit is also good for your credit utilization rate.

5. Failing to monitor your credit report

You should review your credit report at least once a year to look for errors that can affect your credit score, such as accounts reported incorrectly or even someone else’s credit information mistakenly added to your credit report. You can typically order one free credit report annually at However, due to the COVID-19 pandemic, all three credit bureaus are offering one free credit report a week through April 20, 2022.

About the author

Deb Hipp