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Fix credit

Credit Score: How To Fix A Poor Credit Score

Your credit score is very important. We discussed yesterday how to start a credit history. This is usually for 18-20 years old’s that never had a credit card or loan. Today we will explain how to fix a poor credit report.

Why you should care if you have poor credit?

Having poor credit is a terrible thing. We discussed yesterday how to start a credit history. Someone with poor credit will not be approved for loans, mortgages or credit cards. you will not be able to lease a new car, not that stinks!

How does one’s credit come poor?

Poor credit doesn’t have to do with the amount of money in your bank account. It doesn’t either get affected by your age. Poor credit is determined by 5 categories. ‎
  • Payment History – 35%
  • Credit Utilization or Amounts Owed – 30%
  • Age of Accounts 15%
  • New Credit – 10%
  • Types of Credit In Use – 10%
To read our full report on you credit score, read our article what makes up your credit score. If any of these categories are affected your credit drops. For example: You can have a sterling credit, pay all your bills on time, a long age of account, low credit utilization, and no new account. If you would have 1 unpaid doctor bill, that can knock your score 100 points. If you have several account that are delinquent as well as high credit utilization you are a victim of poor credit.

What happens when you have poor credit

When you have poor credit you are in bad shape. Nothing happens, and you are not a bad person. You may not be approved for a mortgage. If you are approved, it may be at a higher rate. You will not be able to sign up for credit cards. You may not be able to get a lease, or a student loan. No one trusts someone who has poor credit.

How do you make your credit score increase?

You need to pinpoint the reason why you have bad credit. Is it credit card debt or is it a doctor bill. There are companies that help you repair your credit. We recommend to try to fix it yourself first. Depending on what the cause is determines what you need to do to fix it.
High credit utilization
That’s easy to fix, slow down! You need to be spending less then 30‎% of your total credit line.
Unpaid Credit Card Accounts
Stop spending. The only way you will be able to use credit cards is if you are responsible. Make it a rule, do not buy anything on credit card that you can’t afford. If you don’t have the money for it, don’t buy it.
Call the credit card company. Ask them to lower your APR, this will save you money. Ask them if you are able to make a settlement. A settlement is when you agree on a amount you have to pay, as well as a time frame. for example if you owe $5000 to the bank. They might agree for a settlement of $100 a month for 4 years. This will be a total of only $4800. The benefit is you will not be paying any additional interest. You can also have this delinquent account removed from your credit report.
Delinquent Accounts
Many times your insurance doesn’t cover a payment and you have an unpaid doctor bill. This unpaid bill makes it’s way to “collections” and from there onto your credit report, which makes an ugly mark. Delinquent account are not only from doctor bills. They can be from your utility company, your cell phone provider or even from your credit card provider.
The first thing that you need to do is verify if the charge is correct valid.
  • If the charge is valid, use one of the ways we discussed earlier to remove it. (Lower APR, make a settlement etc.)
  • If the charge is not valid, then you are able to dispute it. to dispute a charge you need to know which credit bureau the delinquency is on. All credit bureau’s have an online form to fill out to dispute inaccurate information. Fill out the form, and within 2 weeks you should hear back from them. If there is any substance to your claim, the negative account should be completely removed from your credit report. Read Point Me to The Plane’s narrative on how to dispute an Experian error.

There are many more minor factors that influence your score. Opening a new credit card drops your score by 5 points. Having a lot of new credit lowers your score as well. At the end of the day, these factors are temporary, as minuscule compared to the delinquencies and unpaid accounts.

Keep tabs at all times of your credit so you can know where you are holding. You can view your credit report for free once a year by visiting annualcreditreport.com. We recommend to take advantage of this offer, and do it yearly.

More Articles that may interest you

How To Improve A Low Credit Score

FACO Credit Score FICO Score: What’s The Difference?

What Makes Up Your Credit Score

Beginners Guide To Credit Cards: How What When Why Where

Soft Inquiry vs Hard Inquiry What Is The Difference?

In Summary:

Keeping tabs on your credit score is very important. There are a few ways to improve your credit score. If you have accounts in collections, try to settle them with the collectors. Dispute inaccurate information. Pretty soon your “poor credit score” will be looking good.

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