What Habit Lowers your Credit Score?

 

Your credit score is shaped by key habits like paying bills on time, keeping credit utilization below 30%, limiting loan applications, regularly checking your score, and being cautious with cash advances. Avoiding common pitfalls like late payments and high balances protects your credit. Using tools like a habit tracker can help you build consistent routines to improve and maintain a strong credit score.

Main Takeaways

• What habit lowers your credit score? Consistently making late payments or missing them entirely is the biggest habit that harms your credit score.
• Always pay your bills on time to build a strong payment history.
• Keep your credit utilization below 30% to protect your score.
• Limit how often you apply for new loans or credit cards in a short time to avoid multiple hard inquiries.
• Regularly check your credit score to catch changes or potential fraud early.
• Be cautious with cash advances, as they can increase your credit utilization and come with high fees and interest.
• Use tools like a habit tracker to stay consistent and build positive financial habits that support credit health.

Introduction

Credit is one of the most essential yet often confusing areas in personal finance. This article aims to simplify the key elements that make up your credit score and highlight a few simple habits you can adopt right now to help improve it.

1. Pay Your Bills on Time

When it comes to calculating your credit score, your payment history carries the most weight. In fact, it makes up 35% of your total score.

Making timely payments on your credit accounts is one of the most effective ways to build a strong history and improve your credit standing.

So, what habit lowers your credit score? Consistently paying bills late—or worse, missing them altogether—is one of the quickest ways to bring it down.

The effect can vary depending on your current score, but those with higher scores tend to see the sharpest declines after a missed payment.

Even more, late or missed payments can stay on your credit report for several years, which is why avoiding them is so important.

To make it easier to stay on track, consider setting up automatic payments.

2. Maintain a Low Credit Utilization Rate

Understanding how much of your available credit you're using is crucial for protecting your credit score. A common recommendation is to keep your usage below 30% of your total credit limit — and the lower, the better.

The portion of your available credit that you actually use is known as your credit utilization rate, and it plays a major role in determining your credit score. You can figure it out with this simple formula:

Credit Utilization Rate = (Total Credit Used / Total Credit Limit) × 100

For example, if you have a credit limit of $5,000 and you spend $3,000, your credit utilization would be 60%.

So, what habit lowers your credit score? Regularly carrying a high credit balance—or maxing out your cards—is one of the key habits that can drag it down.

To help keep your credit utilization under control and avoid hurting your score, it’s best to avoid using your credit card in the following situations:

• When you're approaching your credit limit
• If you don’t have a solid plan to pay it off
• For non-essential spending that isn’t in your budget

3. Avoid Frequent Loan Applications Within a Short Timeframe

Each time you apply for a new loan, the lender typically performs a hard inquiry—also known as a "hard pull"—which involves reviewing your credit report to assess your creditworthiness. These hard inquiries can cause a slight dip in your credit score.

What habit lowers your credit score? Submitting multiple loan or credit card applications over a short span of time is one of them.

This behavior can compound the negative effects of hard inquiries and may suggest to lenders that you’re a higher credit risk.

Keeping your applications for new credit to a minimum helps reduce the number of hard pulls on your credit file.

While these inquiries remain on your report for up to two years, their impact tends to lessen over time. Still, it’s wise to space out your credit applications to help protect your score.

4. Monitor Your Credit Score

Keeping an eye on your credit score regularly is one of the most effective ways to stay informed about your overall credit health. It helps you track any changes in your score and spot suspicious or unauthorized activity early on.

Many people assume there’s only one credit score, but that’s a common misunderstanding.

In reality, credit card companies and credit bureaus use different scoring models, which means your score may vary depending on who is reporting it.

The most widely used scoring model is the FICO score, especially in applications for credit cards, auto loans, and mortgages. This model ranges from 300 to 850, and is generally categorized as follows:

• 300–579: Poor
• 580–669: Fair
• 670–739: Good
• 740–799: Very Good
• 800–850: Excellent

So, what habit lowers your credit score? Ignoring your credit score entirely can lead to undetected issues, including errors or fraud, that might damage your rating over time.

To stay ahead, it’s recommended to review your score at least once a year, or more frequently if you're preparing to apply for new credit.

Checking your own score counts as a “soft inquiry,” meaning it has no negative impact on your credit.

5. Use Caution When Taking a Cash Advance

A cash advance allows you to withdraw cash using your credit card, pulling from your available credit rather than a checking account.

Unlike taking money from your bank balance, this is essentially borrowing funds—and it often comes with additional costs.

By itself, a cash advance isn’t necessarily harmful. However, it can become risky if not handled wisely.

It’s important to remember that the amount you withdraw through a cash advance is added to your credit card balance—it is not deducted from your bank account.

In urgent situations, a cash advance may seem like the fastest solution. But before taking that step, keep the following in mind:

• A cash advance functions as a loan.
• You may be charged a fee for using this service.
• The interest rate applied to a cash advance is often higher than your card’s standard APR.
• It uses part of your available credit, which increases your credit utilization.

For example, if your credit card limit is $1,000 and you take out a $500 cash advance, your credit utilization rises to 50%. This can hurt your credit score, since it's recommended to stay below 30%.

So, what habit lowers your credit score? Frequently relying on cash advances—especially without a plan to pay them off—can increase your credit utilization and damage your score.

If you decide to use a cash advance, aim to repay it quickly and avoid exceeding that 30% threshold.

Stay Consistent with the Right Tools

Good credit starts with good habits—and staying consistent is where many people struggle. That’s why using a habit tracker like the one available on our website can be a game-changer.

Our Digital Habit Tracker is designed to help you build and maintain positive financial routines, like making payments on time, keeping credit usage low, and monitoring your progress.

When it comes to protecting your score, tracking your habits isn’t just helpful—it’s powerful. Start small, stay accountable, and let your habits lead the way to a stronger credit future.

Conclusion - What Habit Lowers your Credit Score?

Now that you have a clearer understanding of how your credit score is calculated, it’s time to put that knowledge into action. Be thoughtful about how you use your credit card, and always have a repayment plan in place before taking on any new loans. Managing debt responsibly is key.

Your credit score plays a major role when applying for credit cards, car loans, and home financing, so it’s essential to treat it with care. As you focus on improving your credit, keep the strategies from this article in mind.

What habit lowers your credit score? Ignoring these principles, such as overspending or missing payments, can hold you back. But by following these tips consistently, you’ll be setting yourself up to work toward that perfect score of 850.

Thanks for reading,

The DigyKeys Team

Frequently Asked Questions (FAQs)

What habits lower your credit score?

Several habits can lower your credit score, including consistently missing or making late payments and carrying high credit card balances. Frequently applying for new credit or loans in a short time can also hurt your score. Additionally, relying heavily on cash advances without a clear repayment plan increases credit utilization and damages your credit health.

What lowers your credit score the most?

The single biggest factor that lowers your credit score is a poor payment history, especially late or missed payments. High credit utilization rates—using more than 30% of your available credit—also significantly reduce your score. Applying for multiple new credit accounts quickly can cause hard inquiries that further lower your credit rating.

What things reduce credit score?

Things that reduce your credit score include late bill payments, maxing out credit cards, and taking on too much new debt. Hard inquiries from frequent loan or credit applications can also have a negative impact. Neglecting to regularly monitor your credit report might allow errors or fraudulent activity to go unnoticed, which can further damage your score.

What types of things cause a credit score to drop?

Common causes of a credit score drop are missed payments, high credit utilization, and opening several new credit accounts within a short period. Taking cash advances without a plan to repay can also increase your credit usage and cause your score to fall. Even closing old credit accounts can lower your score by reducing your overall credit history length and available credit.

What worsens credit score?

A credit score worsens when payments are late or missed, leading to a negative payment history. Using a large percentage of your credit limit regularly signals financial stress to lenders and lowers your score. Excessive new credit applications and carrying balances on multiple credit cards can also harm your creditworthiness.

How do I fix my credit score fast?

To fix your credit score quickly, focus on paying down credit card balances to lower your credit utilization below 30%. Make every payment on time to rebuild your positive payment history as fast as possible. Avoid opening new credit accounts or taking on new debt during the repair process to prevent further score drops.

What damages your credit score the most?

The biggest damage to your credit score comes from late or missed payments, which stay on your credit report for years. High credit utilization above 30% consistently also causes significant harm. Multiple hard inquiries from frequent loan or credit card applications can further reduce your score quickly.

What drops your credit score fast?

Your credit score drops fast when you miss payments or max out your credit cards. Taking out cash advances without a repayment plan can quickly increase your credit utilization and cause rapid score declines. Applying for several new loans or credit cards in a short period can also lead to a sharp drop.

What is the #1 way to hurt your credit score?

The #1 way to hurt your credit score is by missing payments or paying late, as payment history is the largest factor in credit scoring. This habit signals to lenders that you may be a risky borrower. Avoiding late payments is essential for maintaining and improving your credit health.

What are the 5 main things that affect your credit score?

The five main things that affect your credit score are payment history, credit utilization, length of credit history, new credit inquiries, and credit mix. Among these, payment history and credit utilization have the biggest impact. Managing these factors carefully will help you maintain a strong credit score.

What puts your credit score down?

Your credit score goes down when you miss payments, carry high balances, or apply for too much new credit too quickly. Using a cash advance without a repayment strategy can also negatively impact your score. Neglecting to monitor your credit report can allow issues to persist and drag your score down further.

What makes your credit score go low?

Your credit score goes low when you fail to pay bills on time or max out your credit cards regularly. Taking multiple new loans or credit cards within a short time frame increases hard inquiries that lower your score. High credit utilization and missed payments are the top reasons for a declining credit score.

What are two mistakes that can reduce your credit score?

Two common mistakes that reduce your credit score are missing payments and maintaining high credit card balances. Another is applying for multiple credit accounts too often, which leads to numerous hard inquiries. Avoiding these errors is crucial to protecting your credit health.

Written by DigyKeys Editorial Team
The DigyKeys Editorial Team is a dedicated group of writers, researchers, and digital experts who provide insightful content and resources to help you navigate the digital world. From personal development tips to creative strategies, we deliver practical advice and tools to enhance your productivity and achieve your goals.

Updated July 2025