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What should I do if I have a bad score?

Have a score below 620? Per, Fannie Mae and Freddie Mac underwriting guidelines, if your credit score is below 620 your credit score is considered low.

However,  the good news is you can fix a bad credit score.

It will take time. While there’s no quick fix, there are several things you can do that over time will raise your score over time.

First of all, thoroughly read your credit report and dispute any inaccurate or outdated information. You will be able to access your credit report for free once a year.

A bankruptcy will fall off your credit report after ten years, and most negative information will fall off after seven. Criminal or legal issues may take longer, and some won’t come off at all, but your first step should be evaluating what’s on your report now to make sure it’s current and correct.

The fastest boost you can give your score is bringing all of your delinquent accounts current, which you’ll see reflected on your credit report within two months.

If you have any accounts that are overdue, make those payments immediately, and make a habit of paying bills and debts on time and in full every month.

Another way to boost your score is to pay charged off accounts. A charged off bank or credit card account can be brought right and will erase one black mark from your credit score.

As you work on building a history of positive credit, don’t make the mistake of opening new lines of credit or closing existing lines. Remember that the credit inquiry for a new loan or credit card will ping your score, and keeping an old account open can bolster it.

If you are struggling to pay off debt while making monthly bills, you should consider seeing a financial advisor at your bank or through a reputable firm.

Sometimes personal loans are good options for people who have excessive credit card debt that they can’t keep up with. But don’t make this choice alone—talk to a certified financial advisor to determine how to best face your unique financial issues.

Having a low score can make life difficult, but it’s not permanent! Start making changes now to improve your credit history and slowly but surely, your score will go up.

What can I do to improve a fair or good score?

If you have a fair or good credit score, you’re not starting from square one, but you still have room to improve!

While it’s difficult to get into the top tier of excellent credit scores, it can really pay off if you need to take out a mortgage or auto loan.

The first step in getting from a C to an A+ is assessing your debt. There are optimal credit utilization ratios—if you limit how much of your available credit you use, your score is likely to improve.

Experts say that the best credit scores belong to people who use less than 10% of the credit available to them. So if you have a credit card with a limit of $1,000, you should never have a balance higher than $100. However, as long as you’re using 30% or less of your credit limit, you’re probably not going to hurt your score.

Something else you can optimize is your credit mix.

Having five credit cards won’t look as good on your credit history as having a mortgage, a student loan, and a credit card would. Having diverse lines of credit shows you can handle multiple financial responsibilities.

Just remember that it’s far more important to have a good payment history than a good credit mix, so don’t take out more debt than you can handle.

Another important thing to remember is to keep building your credit history.

It may be tempting to close a line of credit you’re not using, but the best credit scores belong to people who have an average account history of eleven years.

Letting those months of on-time payments stack up will pay off in the long run, so keep those accounts open! Just as you shouldn’t close existing accounts, avoid opening new ones. Opening too many new accounts can not only ping your credit score, it can telegraph that you’re a high-risk borrower.

If you’re already doing all these things, you’re in a good place! Maintain your good habits and over time, you’ll see your credit score climb.

Conclusion

If you would like to talk more about improving your credit or obtaining loan for your property, feel free to reach out to me here.