Credit Score: A Small Mistake Can Cost You 100 Points – Here's What to Avoid

Your credit score plays a crucial role in many aspects of your financial life — from getting approved for loans to determining your insurance premiums. Ignoring basic financial habits like timely payments or maintaining low credit utilization can lead to serious consequences. If you want to keep your credit score healthy, it's essential to avoid a few common mistakes.

What Is at Stake?

Your credit score, a key indicator of your creditworthiness, can drop by up to 100 points due to simple financial missteps. This drop can harm your overall financial profile and affect your ability to get loans or favorable credit terms in the future. Experts warn that losing 100 points is no small issue — it impacts everything from loan approvals to the interest you pay on insurance policies.

If you want to protect your credit health, make sure to avoid the following mistakes:

1. Late Payments or Defaults

Financial institutions and credit bureaus take late payments seriously. Even a 30-day delay in repaying EMIs or credit card bills can lower your credit score by 50 to 100 points, depending on your credit profile. The Reserve Bank of India has repeatedly emphasized the importance of timely payments in its financial stability reports. A good payment history is vital for future credit access.

2. High Credit Utilization

If you use more than 30% of your credit card limit, it can negatively affect your score. High credit usage signals overspending or excessive dependence on credit. This could make lenders cautious and reduce your chances of getting loans or better credit terms in the future.

3. Closing Old Credit Accounts

Many people unknowingly damage their credit score by closing old credit cards, personal loans, or other long-standing credit accounts. Doing so reduces the average length of your credit history, which is a key factor used by credit bureaus to assess your financial reliability. Keeping older accounts open (if they’re in good standing) can positively influence your credit score.

Final Thoughts

Maintaining a good credit score isn’t difficult if you consistently follow basic financial discipline. Pay your bills on time, keep your credit usage low, and avoid unnecessary account closures. These small steps can make a big difference in your financial future.