A bad credit score can seem to affect more than just the financial facets of your life, seeping into the very quality of your everyday existence.
But what is a bad credit score?
When evaluating your credit score, 700 or above is considered good, while anything above 800 is excellent. However, if you’re falling below the “good” line and tired of dealing with bad credit, high interest rates, and the stress that comes with it, there are steps you can take to jumpstart the process and raise your credit score. And there’s one advantage to having a low credit score—you’re well-positioned to bring up your score quickly by as much as 100 points.
Make Payments on Time: The No. 1 place to start is to begin by paying your bills on time. On-time payments account for 35% of your credit score in the FICO formula. Paying 30 days late or more can drop your credit score by 100 points. Although this may be easier said than done, pay as soon as you can. Once your account is up to date, you can talk to your lenders and ask them to remove the late mark as an act of goodwill.
Dispute Errors: The next step toward boosting your credit score is to access your free credit report from the three credit reporting agencies: Experian, Equifax, and TransUnion. Then, look for any possible errors. If there are any legitimate mistakes in your report you can dispute them and get them removed, which can bring your credit score up.
Mix it Up: A mix of credit cards, retail accounts, installment loans, finance company accounts, and mortgage loans can all help your credit. While you don’t have to have one of each, diversity can help your credit score by as much as 10%.
Get Into a Debt Management Plan: Of course, going back to that first step—making payments on time each month is vital to boosting your score. That’s why a debt management program can help. The goal of a debt management program is to lower your interest rate and consolidate your loans into one affordable monthly payment. This will get you on the right track to improving your credit score.
Additionally, credit counseling sessions can help you prepare a monthly budget, address your debts, and get a better handle on your credit. All of this should set you up for a successful financial future – free from bad credit!