Whether you’re trying to buy a vehicle or get a small business loan, a respectable credit score can make the difference between getting the cash you need...or not.

Just like in life, ups and downs are part of the game with your credit report, so don’t panic if your credit report takes a dip. There are many reasons your credit can drop, but there are also several ways to prevent or recover from these impacts. Here we’ll take a closer look at the most common credit pitfalls so you can keep your score in tip-top shape.

Missed Payments

One of the biggest factors that affects your credit score is making payments on time, every time. When you’re more than 30 days late on a payment, your credit rating is going to take a hit. The drop could cost you up to 100 points, which can devastate an otherwise stellar report.

To avoid this issue, make sure you’re budgeting and setting reminders for yourself so you don’t miss a payment. Or, set your accounts on auto-pay so you can set it and forget it. If you do end up missing a payment, remember that it won’t be reported to the credit bureau until it’s 30 days past due, so make a payment as quickly as possible to get your account current. If your payment is more than 30 days late, still pay off the amount as quickly as possible. You can then reach out to your creditor with a goodwill letter to see if they’ll remove the negative mark from your account.

Closed Accounts Can Affect Your Credit Score

It can feel good to downsize some of your credit cards that aren’t in use but closing a credit account can negatively impact your score. This is because it can change your amount of available credit; one of the factors in calculating your score. Or if it was an older account, it can change the average length of your credit history.

Before you close a credit card, take a look at how old the card is and how much available credit it has. It may be worthwhile to keep the accounts open and just keep the cards in a safe place where you’re not tempted to use them. A good rule is to not close an account unless it’s absolutely necessary.

Bill Sent to Collections

Occasionally, despite your best efforts in paying down debt, a bill may be sent to collections. Whether it’s from a long-forgotten medical debt or just something that fell off your radar, accounts in collections can be a heavy blow to your credit rating.

Having an account sent to collections will cause your credit to dip suddenly, but over time your credit will recover. And, in most cases, the sooner the debt is removed from your record the better. You should make every attempt to pay off collections as soon as possible so your credit can make a swifter comeback.

Applying for New Credit

When applying for a new credit card or a mortgage, a lender will often do what’s called a “hard credit inquiry” where they check your credit rating to see how much of a liability you are. Unfortunately, this process can have a negative, albeit temporary, impact on your score.

Be mindful of how often you apply for new credit, and what types of lenders you apply with. While hard credit pulls fall off your credit fairly quickly, they can impede you in the long run if you make them too often.

Change in Credit Utilization Rate

This one is going to involve math, so buckle up.

Your credit rating is determined in part by what’s known as your “credit utilization rate,” which is the amount of credit you’re using divided by the amount of credit you have available to use.. This means if you significantly increase your credit usage or your credit card limits decrease, your credit utilization rate could go up and your credit rating could trend downward.

Experts recommend trying to keep your credit utilization rate less than 30%. If you’re over that percentage you may see your credit begin to decline, so either work to pay down some of the debt, or see if you can increase a credit line to give you more leeway.

Legal Actions

This type of credit hit can be particularly troublesome. Derogatory marks originating from legal actions such as a foreclosure, lawsuit, bankruptcy or tax lien typically take about 7-10 years to completely fall off your credit report, although the effect of the mark does lessen over time.

If you see marks like these on your credit report but they don’t look accurate or you believe a mistake has been made, you can always dispute the marks and ask them to be removed from your credit report.

Keep Your Credit Score Stable with LendNation

Even when you’re saving money and budgeting, life still happens and you may find yourself running behind on bills. apply for a loan through LendNation to cover your payments and keep your credit intact.

With both in-store and online options, LendNation offers a variety of loans – title loans, installment loans and payday loans – to help you stay on track. Learn more and apply today!