According to a San Antonio credit repair company, if you want to get a loan for a car or home, or you want to get a credit card, it’s essential you have good credit. However, according to Experian, approximately 30% of Americans suffer from poor credit scores. Depending on the reporting agency, credit scores range from 300 to 850 and 499 or below is considered bad credit.
In this article, we look at what determines your credit score and how you can improve yours if it’s in the dumpster.
Your Credit Score
Now that we know what is a bad credit score, what causes that number to go down? The biggest determining factor is late payments. Your payment history comprises 35% of your credit score and is the number one factor that you need to pay attention to. Late payments, charge offs, and bankruptcies all fall under payment history. Next up is the amount you owe, which represents 30% of your credit score. Third, your credit history comprises 15% of your credit score, which means how long your accounts have been open and active. New credit makes up 10% of your score and the kind of credit you hold accounts for another 10%.
Fixing A Bad Credit Score
So, let’s say you’re one of the millions of people with a below average credit score and you want to improve. it. The first thing to do is to get a copy of your credit report and your credit score so you can monitor what you do. Also, getting your credit report allows you to make sure everything is accurate; sometimes errors on a report can ding your credit score, and if you notice any, you want to take care of it right away by filing a dispute.
The first step to improving your credit score is to make payments on time. Remember, payment history is the most important marker on your credit score and it’s the easiest way to get your score headed in the right direction quickly. Use an app to set reminders to pay or better yet, set up autopay for every account so you never miss.
The next step to improving your credit score is to pay down your debts as quickly as possible. Since your debt to credit ratio is the next largest deciding factor in your credit score, you want to work hard to pay down balances by paying more than the minimum every month.
Lastly, and this might sound crazy, get another credit account. Even though you’re trying to get out of debt, getting another credit account will improve your credit to debt ratio and give your score a tick in the right direction.
When Can You Expect Results?
While a bad credit score is depressing, the good news is that it’s not permanent no matter how badly you messed up. Regardless of how bad your credit is, if you’re diligent, make payments on time, you’ll begin to see results in a few months.
