Monitoring your credit score is a good idea. Not only does it allow you to catch potential fraud or errors, but it also helps you build a better understanding of what types of activities cause your credit score to go up or down. Learning what lowers your credit scores can help you make better financial decisions to avoid pitfalls and keep your score high.

What lowers your credit score

There are a number of factors that can lower your credit score. These include:

High credit utilization: Your credit utilization is a comparison of the credit you’re currently using compared to the total amount available to you. For example, if you have a credit card with a $500 credit limit and a $300 balance, your credit utilization is 60% (your $300 balance divided by the $500 total credit limit). The higher your credit utilization rate, the more of a negative impact it will have on your credit score. According to Experian, you should aim to keep your credit utilization rate under 30%.

Late payments: Your payment history is a good indicator of how trustworthy you are to pay future debts on time. If you’re late by more than 30 days on a payment, it will end up on your credit report. Creditors don’t like to see a history of late payments, so too many of these will seriously bring your credit score down.

Short credit history: You may have heard of the term “building credit,” which refers to opening and using accounts over a long period of time to establish a history of good credit. If you just recently began to build credit, your credit score won’t be as high as those with a longer credit history. Even if you haven’t done anything wrong, having a short credit history will lower your credit score until you establish a few years of responsible behavior.

Lack of diversity: Your credit score is influenced by a wide range of different account types like credit cards, student loans and mortgages. Credit agencies like to see a mix of accounts to show that you can responsibly repay various types of debt.

Recent activity: If you’ve recently opened new credit accounts and/or there are several hard inquiries on your credit report, your credit score will take a temporary hit. Creditors consider you riskier if you’re taking on too much debt at once. Try spacing out the amount of time between applying for new accounts to keep your credit score stable.

Account closures: Just like opening too many accounts at once impacts your credit score, closing your old credit cards can also cause your credit score to go down. This is because your average credit history goes down when older accounts are closed, while your credit utilization ratio goes up due to a diminished total available credit. Both factors will lower your credit score.

Falling behind on rent: You might not think your monthly rent payment will affect your credit scorebut it can. Your landlord can opt to report you to the credit bureaus if you fall behind. While this probably won’t happen if you’re late by a few days, it’s certainly a possibility if you develop a pattern of failing to pay rent to your landlord.

Unpaid medical bills: Medical bills are an unexpected burden that can cause otherwise financially healthy individuals and families to go into serious debt. If you’re hit with a major medical bill that you can’t pay, it could eventually end up in collections, causing your credit score to take a dive. Avoid this scenario by negotiating an affordable repayment plan.

Bankruptcy: Sometimes, filing for bankruptcy is the only option for those who find themselves in serious debt. But taking this action will have significant lasting effects on your credit score. A bankruptcy will stay in your credit report for up to 10 years and can keep your credit score low for that long.

Knowing what lowers your credit scores is an essential part of taking control over your financial health. Keeping your credit score as high as possible will help you get the best interest rates and terms on all types of loans. You’ll also have a better chance of getting approved for the best credit cards on the market.