Your Credit Score Might Take a Beating if You Do These 3 Things

These moves could damage your credit score -- and make it harder for you to borrow when you need to.

Your credit score isn't just a random number. Rather, it's calculated based on a number of factors -- how timely you are with your bills, how much credit you use at once, and whether you tend to borrow responsibly. Having a higher credit score could make it easier for you to qualify for a loan or snag a lower interest rate on one. But if you make these seemingly innocent moves, your credit score could end up taking a plunge.

1. Applying for too many cards at once

You may be tempted to apply for a new credit card when a generous sign-up bonus opportunity presents itself, or when you learn of a rewards program you can benefit from. But be careful -- applying for too many new cards within a short period of time could cause your credit score to take a hit.

Each time you apply for a new credit card, it counts as a hard inquiry on your credit report. A single hard inquiry will generally drop your score by about five to 10 points, which isn't a huge deal if your credit is great to begin with. But if you have three hard inquiries within the same month or two, that could cause a drop in your score of close to 30 points, and that's more damaging.

Another factor that goes into calculating your score is your credit mix, which refers to the different types of accounts you have open. A healthy credit mix will usually be a combination of revolving credit (what credit cards give you) and installment loans, like a mortgage or car loan. But if you apply for too many new credit cards at once, it could skew your mix in a less healthy direction and cause damage to your score. A better bet is to space out credit card applications -- ideally, by six months or more, but at least by 90 days.

2. Closing an old credit card

If you have a credit card you barely use, you might assume that closing it makes sense. But actually, doing so could work against your credit score.

Another factor that goes into calculating that number is the length of your credit history. If you close a credit card you've only had open for a year, the impact on your score should be minimal. But if you close a credit card you've held for 10 years, it could hurt your score a lot.

3. Paying off a loan

If you're a diligent saver, you may end up in a position where you're able to pay off a personal loan or auto loan ahead of schedule. Or, you might just pay off that loan over time. Now you'd think that would be a good thing -- it shows that you kept up with your payments and stuck to a payoff schedule. But believe it or not, your credit score could take a hit after a loan is paid off.

Why so? We just talked about the importance of having a healthy credit mix. If you owed money on an auto loan plus three credit cards, and now that auto loan is gone, your only open accounts would be credit cards, which are considered a less healthy type of debt to have. As such, your credit score could take a hit when your credit mix suddenly appears less favorable -- even though paying off a loan is, in fact, a responsible thing to do.

Sometimes, your credit score can take a hit through no fault of your own, like paying off a loan on schedule. But in other cases, you can avoid hurting your credit by spacing out applications for new credit cards and keeping long-standing accounts open. Either way, it helps to keep reading up on the various things that can impact a credit score so that you're able to keep yours in good shape.