Skip to main content
Advertiser Disclosure
We do receive compensation from some partners whose offers appear on this page. We have not reviewed all available products or offers. Compensation may impact the order in which offers appear on page, but our editorial opinions and ratings are not influenced by compensation.

The Ascent Logo The Ascent Logo - Blue circle with an A in it and the ascent a motley fool company to the right of that

  • Credit Cards
  • Banking
  • Brokerages
  • Loans
  • Mortgages
  • Knowledge
  • Latest Picks
  • Search Icon Click here to search

Credit Cards

Top Picks
  • Best of January 2021
  • Cash Back
  • Balance Transfer
  • Travel
  • 0% APR
  • Rewards
  • Bad Credit
Knowledge
  • Beginners Guide to Credit Cards
  • How to Rebuild Your Credit
  • Maximize Your Credit Card Rewards
  • Learn More About Credit Cards
Credit Card Tools
  • Compare Cards
Looking for a new credit card?

Explore the best credit cards in every category as of January 2021.

Get started!

Banking

Top Picks
  • Best Savings Accounts
  • Best Bank Accounts
  • Best Money Market Accounts
  • Best CDs
  • Best Checking Account Bonuses
Knowledge
  • Beginners Guide to Banking
  • Everything You Need to Know About Savings
  • Money Market Accounts Made Easy
  • Learn More About Banking
Looking for a place to park your cash?

Check out our top picks of the best online savings accounts for January 2021.

Get Started!

Brokerages

Top Picks
  • Best Brokers of January 2021
  • Best Online Brokers for Beginners
  • Best Options Brokers
  • Best IRA Accounts
  • Best Roth IRA Accounts
  • Best Robo Advisors
Knowledge
  • How to Open a Brokerage Account
  • Beginner's Guide to Brokerages
  • Learn More About Brokerage
Just getting started?

Explore our picks of the best brokerage accounts for beginners for January 2021.

Get Started!

Loans

Top Picks
  • Best Loans of January 2021
  • Best Personal Loans for Bad Credit
  • Best Loans for Debt Consolidation
  • Best Low-Interest Personal Loans
  • Best Personal Loans for Good Credit
  • Best Personal Loans for Fair Credit
Knowledge
  • Personal Loans Made Easy
  • Debt Consolidation Guide
  • How to Pay Off Debt
  • Learn More About Loans
Thinking about taking out a loan?

Before you apply for a personal loan, here's what you need to know.

Get Started!

Mortgages

Top Picks
  • Best Mortgage Lenders of January 2021
  • Best Mortgage Lenders for Poor Credit
  • Best Refinance Lenders
  • Best VA Mortgage Lenders
Knowledge
  • First Time Homebuyers Guide
  • Home Loans Made Easy
  • The Complete Guide to Refinancing
  • How to Get a Mortgage with Bad Credit
  • Learn More About Mortgages
Tools & Calculators
  • Mortgage Calculator
Compare Rates
  • Today's Mortgage Rates
  • Refinance Rates
  • 15-Year Mortgage Rates
  • 20-Year Mortgage Rates
  • 30-Year Mortgage Rates
  • Jumbo Mortgage Rates
  • VA Loan Rates
  • 5/1 ARM Rates
  • 7/1 ARM Rates
  • FHA Mortgage Rates

Knowledge

Knowledge Section
  • All Articles
  • Credit Card Articles
  • Banking Articles
  • Brokerage Articles
  • Personal Loan Articles
  • Mortgage Articles
  • Personal Finance Articles
Recent Articles
  • Weekly Mortgage News Roundup for Jan. 15, 2021

    Mortgages

    Weekly Mortgage News Roundup for Jan. 15, 2021
  • When Should You Sell Your Home? The Benefits of Each Season

    Mortgages

    When Should You Sell Your Home? The Benefits of Each Season
  • Current Mortgage Refinance Rates -- January 15, 2021: Rates Continue to Rise

    Mortgages

    Current Mortgage Refinance Rates -- January 15, 2021: Rates Continue to Rise
  • How These 3 Store Credit Cards Save Me Hundreds Each Year

    Credit Cards

    How These 3 Store Credit Cards Save Me Hundreds Each Year
  • The Ascent
  • Knowledge
  • Credit Cards

The Biggest Threat to Your Credit Score

by Christy Bieber | Dec. 17, 2018

The Ascent is reader-supported: we may earn a commission from offers on this page. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation.

Your credit score is an important financial metric. You don't want to put it at risk by ignoring this major threat.

100 dollar bill burning

Image source: Getty Images

Your credit score is one of the most important numbers in your life because it affects how you borrow money for a loan, and many other important transactions. It's imperative you understand how to earn a good credit score -- and what it could cost you by lowering your credit.

In particular, there's one big thing that's the biggest threat to your credit score: financial irresponsibility. Financial irresponsibility is a threat to your credit score for four key reasons.

1. Financial irresponsibility can lead to maxing out your cards

One of the most important metrics in determining your credit score is the amount of your available credit you've used. Keeping your credit utilization ratio to less than 30% is ideal if you want to earn the highest possible credit score. And keeping it lower is even better both to avoid interest charges and to show you aren't a reckless borrower.

Unfortunately, if you're financially irresponsible, you're more likely to charge up to the limit on your credit cards. This raises red flags to lenders who fear you'll get in over your head and become unable to pay your debt -- and it can drag your credit score down.

2. Financial irresponsibility can cause you to pay late

If you aren't financially responsible, you may make a late payment because you forget to pay on time or because you don't have the money to pay. This can seriously damage your credit, as payment history is the single most important factor in determining your credit score.

Depending where your score was when you paid late, one payment that's 30 or more days late could drop your score between 60 and 110 points. You can't afford to make this mistake, so make sure that you make every payment on time.

Ideally, you'll pay off the balance in full each month when you pay your credit cards, as carrying a balance can become very expensive. But, even if you can't pay off the card, make at least the minimum payment by the due date.

3. Financial irresponsibility could cause legal action against you

If you're not financially responsible, you could end up in so much debt that you need to declare bankruptcy.

Or, you might end up with a creditor suing you, a bank foreclosing on you, or a car loan lender repossessing your vehicle. If any of these things occur, it will send your credit score plummeting and it will take a very long time for your score to recover.

4. Financial irresponsibility could lead you to apply for too much credit

Finally, if you're financially irresponsible, you may end up applying for more loans and credit cards than you should. When you apply for new debt, an inquiry is placed on your credit report. The number of inquiries is a factor in determining your credit score.

Too many inquiries makes lenders wary that you may be going on a borrowing spree. Your credit score will suffer until the inquiries drop off your report -- which takes two years from the date of the inquiry.

Taking on a bunch of new debt also lowers the average age of your credit, which is another important factor in determining your credit score. The longer you've been using credit, the higher your score will be -- provided you've been responsible -- because lenders can see you've been doing the right thing for a long time. Lowering the average age of your score by applying for many new loans due to financial irresponsibility is a bad move.

You can't afford to be financially irresponsible

When it comes to your credit score, you simply cannot afford financial irresponsibility. You owe it to yourself to pay your bills on time, to keep your credit utilization low, and to do what it takes to earn good credit.

If you don't behave responsibly, your credit score could suffer and it could take you a long time to rebuild your credit. It's not worth the hassle -- or the problems with borrowing -- that come from behaving in an irresponsible way.

Our credit card expert uses the card we reveal below, and it could earn you $1,148 (seriously)

As long as you pay them off each month, credit cards are a no-brainer for savvy Americans. They protect against fraud far better than debit cards, help raise your credit score, and can put hundreds (or thousands!) of dollars in rewards back in your pocket each year.

But with so many cards out there, you need to choose wisely. This top-rated card offers the ability to pay 0% interest on purchases into 2022, has some of the most generous cash back rewards we’ve ever seen (up to 5%!), and somehow still sports a $0 annual fee.

That’s why our expert – who has reviewed hundreds of cards – signed up for this one personally. Click here to get free access to our expert’s top pick.

About the Author

Christy Bieber
Christy Bieber icon-button-linkedin-2x

Christy Bieber is a personal finance and legal writer with more than a decade of experience. Her work has been featured on major outlets including MSN Money, CNBC, and USA Today.

Share This Page
Blue Facebook Icon Share this website with Facebook
Blue Twitter Icon Share this website with Twitter
Blue LinkedIn Icon Share this website with LinkedIn
Blue Mail Icon Share this website by email

The Ascent is reader-supported: we may earn a commission from offers on this page. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation.

Related Articles

Credit cards on a desk image for Best Credit Cards for 2021

Best Credit Cards for 2021

Interest spelled out on a calculator image for Compare Credit Cards Side by Side

Compare Credit Cards Side by Side

Man holding cash image for How Do Cash Back Credit Cards Work?

How Do Cash Back Credit Cards Work?

Cyber security and computer screen image for How to Protect Yourself from Credit Card Fraud

How to Protect Yourself from Credit Card Fraud

Featured Articles

Best Credit Cards for 2021

Compare Credit Cards Side by Side

How Do Cash Back Credit Cards Work?

How to Protect Yourself from Credit Card Fraud


We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.

The Ascent Logo

The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.

btn_facebook-yellow btn_twitter-yellow btn_instagram-yellow

Copyright © 2018 - 2021 The Ascent. All rights reserved.

About The Ascent
About Us Contact Us Newsroom How We Make Money Editorial Integrity Ratings Methodology
Legal
Terms of Use Privacy Policy Accessibility Policy Terms and Conditions Copyright, Trademark and Patent Information
Learn
Credit Cards Banking Brokerage Loans Recent Articles

By submitting your email address, you consent to us sending you money tips along with products and services that we think might interest you. You can unsubscribe at any time. Please read our Privacy Statement and Terms & Conditions.

Back to The Motley Fool