Some credit mistakes sting for a few months—others haunt you for years.
Most people don’t realize how fragile their credit score really is until something goes wrong. One small slip can trigger a chain reaction that follows you for years, affecting everything from loan approvals to insurance rates and even job opportunities. Credit scores aren’t just about numbers—they tell lenders how risky you are. And once your score starts sliding, climbing back up takes serious time and discipline.
The problem is, not all credit mistakes carry the same weight. Some are minor speed bumps you can recover from quickly. Others can slam your score hard, stay on your report for years, and cost you thousands in interest. Understanding which mistakes do the most damage can save you from making decisions that feel small now but leave a huge financial scar later. Here are 13 of the worst credit mistakes—ranked—so you know exactly what to avoid.
1. Filing for bankruptcy crushes your score for up to 10 years.
Bankruptcy is the nuclear option for your credit. When you file, it signals to lenders that you couldn’t meet your financial obligations at all. While bankruptcy might offer relief if you’re drowning in debt, it stays on your credit report for seven to ten years, depending on the type, according to Elizabeth Gravier at CNBC.
During that time, getting approved for new credit, loans, or even certain jobs becomes much harder. You’ll face higher interest rates and stricter terms if you’re approved at all. Even after it falls off your report, lenders may still ask about past bankruptcies when reviewing applications. It’s not impossible to rebuild after bankruptcy—but it takes serious time and work.
2. Defaulting on a loan leaves a long-term black mark.
When you stop paying back a loan entirely, it’s classified as a default. Lenders typically report defaults after multiple missed payments, and once that happens, your credit score takes a massive hit. Defaults signal high risk and stay on your report for up to seven years, as reported by the authors at Experian.
The impact is long-lasting because future lenders will see you as someone who didn’t honor a legal contract. That makes new credit approvals harder to get and often forces you into higher interest rates if you do get approved. Even if you eventually pay off the defaulted debt, the original default notation still damages your report.
3. Having a foreclosure destroys both your score and housing options.
Foreclosure happens when you can’t keep up with mortgage payments, and the bank repossesses your home. This is one of the most damaging events for your credit because it combines late payments, legal action, and a major financial loss—all reported to credit bureaus, as stated by Diane Costagliola at Bankrate.
Like bankruptcy, a foreclosure stays on your credit report for seven years. Lenders view it as proof that you couldn’t handle long-term financial obligations. This makes qualifying for future mortgages incredibly difficult for years. Even landlords may view foreclosure as a major red flag when considering rental applications.
4. Accounts sent to collections leave a stain for years.
When unpaid debts get sold to collection agencies, those collection accounts show up on your credit report. Collections are among the most damaging items because they represent debts that were ignored for a long time. Every collection account drops your score and signals financial instability.
Even after you pay off a collection, the account remains on your report for up to seven years, although newer credit scoring models may give less weight to paid collections. Still, having any account sent to collections makes future borrowing much harder, especially for major loans like mortgages.
5. Missing multiple payments in a row can tank your score fast.
Payment history makes up the largest chunk of your credit score. If you miss a payment by 30 days, your score takes a hit. Miss two or three payments in a row? The damage multiplies quickly and becomes much harder to repair.
Lenders see repeated missed payments as a pattern of unreliability. Even if you eventually catch up, the history of late payments stays on your report for up to seven years. This can make lenders hesitant to extend credit or offer favorable terms going forward.
6. Maxing out your credit cards destroys your credit utilization ratio.
Credit utilization—how much of your available credit you’re using—has a huge impact on your score. Maxing out your cards sends your utilization ratio to 100%, which tanks your score even if you’ve never missed a payment.
High utilization suggests financial strain and makes lenders nervous that you’re overextended. Ideally, you want to keep utilization below 30%—the lower, the better. Paying down your balances can improve your score fairly quickly, but carrying high balances month after month leaves a lasting dent.
7. Co-signing for someone else’s loan can backfire badly.
Co-signing makes you fully responsible for someone else’s debt if they stop paying. If they miss payments, default, or max out the account, it shows up on your credit report exactly like it was your own debt.
Many people co-sign for family or friends, thinking they’re helping—but if that person struggles, your credit takes the fall too. Before co-signing, consider if you’re truly willing to risk your score and finances for someone else’s financial habits.
8. Closing old credit cards hurts your credit age and utilization.
It feels responsible to close unused credit cards, but doing so can actually harm your credit. Closing cards reduces your available credit (hurting your utilization ratio) and may lower your average account age, both of which lower your score.
Keeping old cards open with zero balances—even if you rarely use them—helps maintain your credit history and available credit lines. As long as they don’t charge annual fees, keeping them open usually benefits your score far more than closing them.
9. Applying for too much credit too quickly signals desperation.
Every time you apply for new credit, lenders run a hard inquiry, which temporarily lowers your score. If you apply for multiple loans or credit cards in a short period, it suggests financial desperation or instability to lenders.
While a single inquiry only dings your score a little, too many inquiries clustered together can drop your score further and spook lenders into denying your applications altogether. Spread out credit applications and only apply for new credit when you truly need it.
10. Ignoring errors on your credit report allows false damage to stick.
Credit reports aren’t always accurate. Fraudulent accounts, incorrect balances, or mistakenly reported late payments can all unfairly damage your score. If you don’t regularly check your reports, you might not even realize errors are dragging your score down.
You’re entitled to free credit reports from the major bureaus once a year. Review them carefully and dispute any errors immediately. Catching mistakes early can prevent unnecessary long-term damage and help keep your score where it belongs.
11. Defaulting on private student loans can haunt you for decades.
Unlike federal loans, private student loans often come with fewer protections if you default. Once you fall behind, lenders can pursue aggressive collections, legal action, and wage garnishment, leaving long-term marks on your credit report.
Because student loan balances are often high, defaulting on them can leave an enormous dent in your debt-to-income ratio, limiting your ability to qualify for future credit. Private lenders may also be less willing to negotiate or offer flexible repayment options, making it harder to recover.
12. Skipping medical bills can still wreck your credit.
Unpaid medical bills often get sent to collections surprisingly quickly. Even though medical debt carries less stigma with some newer credit scoring models, collections still hurt your score under most systems, especially while the debt remains unpaid.
If you’re struggling with medical bills, try negotiating directly with the hospital or provider before they send your account to collections. Many offer payment plans or financial assistance that can help protect your credit while you catch up.
13. Ignoring small debts entirely creates long-term problems.
Even small debts—like unpaid utility bills, phone contracts, or subscription balances—can get sent to collections and reported to credit bureaus. People often ignore these smaller balances, thinking they’re not a big deal, but they can cause outsized damage.
Every negative mark contributes to your risk profile. Lenders don’t always care if the debt was $50 or $5,000—it still counts as a default or collection. Stay on top of all your bills, no matter how small, to avoid these sneaky hits to your credit score.