What Is a Bad Credit Score – And How Can You Fix It?

A credit score is a 3-digit number that basically tells how bad or good your credit standing is. This is also how potential lenders can tell if you are a good candidate for a loan and can repay a debt or otherwise. The credit score is based on your overall credit report, or the history of your borrowed money and how you paid or didn’t pay.

What is a Bad Credit Score?

Technically, a bad credit score can result in loan denial. So, what is a bad credit score? A bad credit ranges from 300-600, while an excellent credit score can be between 720 and 850. Fair credit and good credit scores play around 630- 689 and 690-719.

How Can I Improve My Bad Credit?

Having a bad credit doesn’t mean that you’ll be stuck with it forever. There are plenty of things that you can do to fix it and improve your chances for loan approval. Here are some of the things that you can do to fix your bad credit:

Secure a copy of your credit report. There are ways and means that you can use to easily get your credit score information for free. Once you get a hold of your credit report, you are more likely to better understand your finances, as well as know the factors that are affecting your credit score. Regular checking of credit score is advised as you can quickly see and correct any problem areas that need improvement. Check out your credit report details and become familiar with the info. From there, you can decide what needed ‘repair’. These include past due accounts, maxed out accounts and even incorrect information.

Manage your debt. Do your best and look for options that will help ease you out of debt. You may use debt consolidations, balance transfer credit cards, etc. as a way to deal with debt. You may also check out debt agreement, to help give a positive impact on your credit score. Most importantly, work out a budget before you decide on this. If possible, minimize your expenses.

Prioritize your repayments. Repaying your debts can help improve your otherwise bad credit score since doing such demonstrate a much-improved financial discipline.

Be wary of closing credit cards. You may think that closing your credit card can help improve your credit score, but most of the time, it doesn’t. As a matter of fact, closing your credit card account can further hurt your credit score, particularly if you are not paying the balances.

Fix any erroneous input. You may not be able to fix all the bad credit listings in your records, but it is crucial to correct the mistakes if there are any. For instance, you might have been a fraud victim and not be responsible for a number of listed debts in the record. If you notice anything like this, contact your credit report agency and report any possible errors. Do not hesitate to discuss it with your credit provider, as well.

Disputing any inaccurate, unverified, or incomplete credit information is one of your rights. There are ways to dispute credit report info and this depends on how you ordered your credit report information. Regardless, it is best to follow the instructions that come with your credit reports on how to make disputes. Disputes can be done online, through the phone, mail, or you can even file a dispute personally if you want.

Avoid applying for credit multiple times. Do not apply for credit from different credit providers in a short time period. Doing this can have a negative impact on your credit score. Lenders also find this alarming because it indicates financial stress.

Get the much-needed advice from experts. There is free financial counseling that you can find, and these expert financial counsellors can give you independent advice regarding debt elimination and money management.

Summing up

Once you have resolved your bad credit score, work on improving your credit by getting positive information added into it. Keep in mind that repayments and timely payments can help up your score, as well as maintaining the balances at a rational level. Opening a new account can help reestablish your credit. Limit credit card applications and do not apply for more than one provider. Why? Because credit inquiries add up to your credit report whenever you make a new application and applying for a number of credit cards can eventually hurt your credit standing. Keep it that way to maintain improvement on your credit score.