1. Late payments

A common cause of damage to your credit score is making late payments. Part of your score is determined by payment history. Frequent instances of late or missed payments may lead to a lower credit score. Despite the fact that a late payment dies not always indicate financial hardship - as it is often the result of simply forgetting when your bill is due - it can still negatively affect your credit score.

There are several easy ways to get around this. Keeping a calendar on your desk or refrigerator is a good example. Place it anywhere in your house where you will see it regularly. Mark the due dates for all of your monthly bills so you know exactly when each must be paid. Another option?

Some companies offer automatic payments where the balance is taken out of your checking account at the same time each month, so you do not have to remember to do it yourself. Remember that creditors want to see that you are responsible and able to make your payments on time and present little risk to them.

2. Maxed out credit

Maxed out credit cards can also lead to a lower credit score. The more debt you have, the more hesitant a credit card or loan company may be about adding to it. For example, if you have four credit cards and each of them is maxed out, you may find it difficult to get approved for a fifth account. Having too many accounts maxed out may cause other lenders to wonder if you are borrowing responsibly and question whether you can handle more credit.

3. Applying for multiple accounts at the same time

Applying for multiple credit accounts at one time can also affect your credit score in a negative way. For example, if you apply for several credit cards at once, a lender may question your sudden need for credit. A bank may be concerned amount the amount of credit being approved all at once and may question the potential borrower's ability to handle that much debt.

The simple solution to this is to space out your applications for credit. There is often no need to apply for them all at once. Spacing out your applications is an easy way to encourage confidence from a credit card company or other lender.

4. Charge-offs

Fourth on the list is what is known as a charge-off. This is where a company shuts down your outstanding account because they do not have faith in you as a continued and reliable borrower. The bank will close your account, leaving you responsible for the outstanding balance, but unable to continue to use the card. Once the balance is paid the account is canceled completely.

This can have a negative impact on your credit score, as it shows other companies that a lender may have lost faith in you as a customer and no longer wishes to keep your business. Avoiding this is very important for maintaining good standing with credit card companies, student loan providers and other lenders.

5. Having an account sent to a collection agency

The last—and potentially most damaging— item on the list is having an account sent to a collection agency. More than making late payments, this can show lenders that there is question as to whether a borrower will ever pay back his or her debt. Companies do not wish to send accounts to collection agencies because it leads to more payment delays.

Problems can be avoided

The important thing to remember when looking at each of these factors is this: they can all be avoided. Spacing out credit applications and not maxing out credit lines, along with making timely payments will build a strong credit base. This will avoid charge-offs or collections and increase your credit score at the same time.

Keeping track of your credit score regularly is a good way to stay on top of any problems that may arise. The three major bureaus used in the United States are Equifax, Experian and Trans Union. Borrowers who find that they have had their credit scores lowered because of any of these issues are not dead in the water. The key is to learn from mistakes and avoid making the same mistakes in the future.