7 Ways to Be a Dolt About Credit

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4. Apply for New Credit Repeatedly

New credit doesn't mean just a shiny new credit card stretching out your wallet; it means a lower credit score -- at least in the short run. The reasons are twofold.

First, new credit accounts lower the average age of your credit history.

"Say you've had one credit card for 20 years and then five others that you just got because you went to five different stores over the holidays and they offered you rebates to sign up for a card," Opperman says.

"The credit score is going to take the one account you've had for 20 years -- 240 months -- and the five accounts that you've had for one year. That's five accounts times 12 months and it would then average all of those accounts together so it only looks like you've had credit for four years," she says.

Also, applying for credit causes a hard inquiry on your credit report. The alternative to a hard inquiry is a soft inquiry, which is what would happen if you pulled your credit report.

Inquiries aren't extremely damaging to a credit score, but multiple hard inquiries in a short period of time can raise lenders' eyebrows, because of that whole reeking-of-desperation-thing, or possibly being up to something illegal. Most banks or credit card companies try to avoid consumers in these scenarios.

However, credit scores do take smart loan shopping into account. When shopping for products such as auto loans or mortgages, consumers are not dinged for each individual auto or home loan-related inquiry within a 45-day window.

Experts recommend doing all comparison shopping within that period of time if possible to minimize credit dings.

5. Don't Pay Fines or Non-Credit-Card Bills

Skipping out on overdue book fines at the library can hurt more than your book-borrowing privileges. It actually can negatively impact your credit score, as can other seemingly meaningless hassles, such as parking tickets.

"These days, public institutions and municipalities will use credit to get people to pay their fines and fees. So if someone has an old library fine that they never paid, it could be killing their credit score without them knowing it -- which is why it is essential to check your score regularly," Opperman says.

Other business relationships that don't normally report your good payments can turn around and bite you if you decide not to pay as agreed. Any business, from garbage collectors to cell phone companies, can turn to the dark side when it comes to getting what's owed to them, and that means sending your account to collections.

"Normally when you have an account with a merchant that doesn't report directly to the credit bureaus, there is a difference between positive and negative reporting. A lot of service providers don't report positive information. But the minute you do something wrong, they can outsource that debt to a collection agency who will report it," Ulzheimer says.

"If I have a Verizon cell phone and pay $79 every single month for the phone, that information is not on any of my credit reports. But if I was on a contract that required that I pay every month and I don't -- it's really only a matter of time before they send it to a collection agency and then the collection agency will report the past-due debt, or the collection debt, on my credit report," he says.

6. Ignore Mistakes on Your Report

Say what you will about credit bureaus: They do make it easy to dispute inaccuracies on your credit report.

Sure, they may not fix them and it may be nearly impossible to ever speak to a live human being. But sometimes, probably more often than not, it works and it's easy.

In order to dispute something on a credit report, one must, of course, check one's credit report. It's easier than it's ever been, so consumers have unfettered access to their own credit information, a vast improvement over the laborious and time-consuming methods used in the dark ages before the Internet.

Unlike other issues that affect credit scores, mistakes sometimes can be remedied easily and quickly, so it's worthwhile to keep tabs on your report.

7. Make Late Payments or Skip Them Entirely

It seems almost too obvious, but it bears stating that paying late and missing payments altogether are stellar ways to ensure that your credit score will scrape the bottom of the barrel.

Fortunately, as it happens, not all missed and late payments are counted equally in credit scores.

According to MyFICO.com's Paperno, the FICO score judges missed and late payments by several different criteria, including how recently it happened, how severely late the payment was and the frequency of missed or late payments.

The recentness of the incident has the most bearing on the FICO score.

"Believe it or not, a 2-year-old incident of a payment being 90 days late is not as bad as a recent 30 days late (payment). The older one may have been one blemish in a long history but a 30-day this month can lead to a 60, which can lead to a 90," Paperno says.

"The score is a predictor of future risk, and all of the factors that are looked at are viewed as to how well they can predict the future. So the more fresh or recent the information is, the more predictive it is," he says. "Lenders are always looking to spot potential problems as early as possible."

The further back in time the mistakes are, the less impact they have on your credit score. Obviously, the fewer mistakes consumers make, the better for their score. Once the mistakes are several years old, however, they may not affect the credit score at all.

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