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How 5 People Ruined Their Credit

Got bad credit? Like it or not, that means that mistakes were likely made. By you.

As tough as it is to raise a poor credit rating to the 700-and-above level, it can be surprisingly quick and easy to send the same score lower. Much lower. Miss a few payments, get in over your head, stop using your available credit ... there are myriad ways to ruin a credit score, and only one way to truly repair the damage: Be financially responsible.

The good news is that America, as a whole, is doing pretty well in the credit rating department. According to Experian, the average U.S. score is 736, mostly centered in the Midwest (four of the top 10 metro areas for high credit scores are in Wisconsin), with Wausau, Wisc. and Minneapolis, Minn. leading the pack. On the flip side, low credit scores are more common throughout Texas and the Deep South, “led” by residents in Harlingen, Texas; Jackson, Miss. and Corpus Christi, Texas. In Harlingen, the average score was just 686 as of 2011.

So how do these low scores happen? We reached out to members of our Yahoo! Contributor Network community who have experienced bad credit in their own lives to find out just how they got into financial trouble and what they learned in the process. A selection of their responses is below.

Name: Nicole Gibbs

Hometown: Fallbrook, Calif.

Lesson: Always pay your student loans

“I did not pay attention to the details on one of my student loans, and I defaulted on it. To make matters worse, I did not realize that I had defaulted and I got a rapid refund for my tax return that year. The way the rapid refund works is that the bank loans you the money until your return comes in. My return did not come in; the student loan company took it. My tax return was not enough to pay off the entire student loan and by the time I was notified of all of this, the money that I had received for my refund loan was gone. So now I had two loans in default. As a single mom trying to get through college, paying off two rather large loans was impossible. My credit score went from the mid 600s to around 500."

Name: Brett Wilkins

Hometown: San Francisco, Calif.

Lesson: If you have credit, use it

“I sold or gave away all my worldly possessions, bought a backpack and traveled the world for five years. And wouldn't you know it, that was just as damaging to my credit as any of my past financial screw-ups. I returned stateside to discover that my credit score was actually the equivalent of zero. Since I was off the grid, so to speak, for so long, there wasn't much for the rating agencies to score me on."

Name: Scott Clark

Hometown: Canton, Mich.

Lesson: Be careful with home equity debt

“As damaging as our primary home mortgage foreclosure was to our credit score, what was even more damaging was the default on our second mortgage taken out on the home to pay for our children's college educations. With real estate markets reeling, our home became over/under; in other words, the market value of the real estate was less than the combined notes carried on the first and second mortgage. With the second mortgage being subordinate to the first mortgage, after the primary mortgage foreclosure was settled, there was nothing left for the second mortgage holder to receive. With nothing left to negotiate with, the holder of the second mortgage began to pursue restitution through aggressive action with collection agencies and eventually hiring an attorney to pursue further legal possibilities."

Name: Cindy Abel

Hometown: Eagle Point, Ore.

Lesson: Always file your taxes

“In the fall of 1998, while driving to work I heard an advertisement on the radio, inviting folks to attend a seminar on ‘Why American Citizens are not required to file income taxes.’ This sounded remarkably intriguing to my husband and I as we were behind on filing our income taxes at the time. We decided to attend the meeting, and we met some fascinating people that day and heard a lot of new information regarding taxes. We went home and started investigating just who is required to file income taxes. After many hours researching, we became convinced that what we had learned at the meeting was true so we stopped filing taxes, not fully understanding that the path we had chosen would soon destroy our credit, our income and our ability to purchase a home, a vehicle or anything else of value.”

Name: Kristen Dyrr

Hometown: Apple Valley, Calif.

Lesson: Know when to abandon a failing business venture

“When my business began to falter, I actually had to skip some bills, which was something I had never done before. The worst part was when made the decision to borrow from my credit card in order to afford it all. The APR went up, the payments simply became too high for me to handle, and the bank decided to close the line of credit completely. I finally started making some money from a new job but not until after they decided to hand me over to collections, ruining my personal credit rating.”