Putting the Fix on a Bad Credit Score

Filed Under Credit

There are lots of things you can do to improve a bad credit score. That is, lots of things you can do over time because it takes time to get your credit score moving in the right direction and then moving faster. You need to build momentum and then follow that momentum.

A good rule of thumb is that it will take 6 to 18 months to turn your credit ship around. So you’ve got to be in it for the long haul. The good news is though that with patience and perseverance you not only can repair your credit, but you can also build some very strong spending habits that will keep you out of credit trouble in the future.

First and Foremost

You need to be able to measure where you are as well as the progress you’re going to make so you need to find out your credit score. Legally, you’re able to request a free report from each of the three national credit reporting companies (Equifax, Experian, and Trans Union) once a year for a total of three freebies in any 12 month period. So if you choose to go that route you’ll need to space out your three freebies about four months apart.

If you can afford it, a better option is to subscribe to one of the company’s reporting packages. There are a lot to choose from so just get something basic. They run in the $10.00 to $15.00 or so range. If you don’t like it, you can unsubscribe. But having a source to go to when you want to will give you a better tracking and trending picture.

I don’t recommend signing up for one of the alert services (just my personal preference). I always felt a “thud” in my stomach when I’d receive one of their emails. I never knew if I was getting bad news, good news, or just nuisance news. But that’s just me. I’d rather see my numbers when I was ready to.

Also, I don’t recommend pulling your report on a daily or weekly basis. It takes time for your work to show up on your report and you won’t see any immediate changes. That can be tough to deal with psychologically and doesn’t really help keep you motivated.

Examine Your Debt

One large factor that affects your credit score is how much money you owe in relation to how much money you could borrow. This is known as the debt to credit ratio. Basically, if you have credit to the tune of $100.00 and you’ve borrowed $90.00 you have a high debt to credit ratio. But if you have that same $100.00 credit and have only borrowed $10.00, then you have a low debt to credit ratio. The lower your ratio, the higher your credit score and the healthier your credit is.

You can make improvements on this ratio in one or two ways. First, you can pay down your debt, without borrowing more. Second you can increase your credit limit, again, without borrowing more. And of course, you can do both simultaneously.

If you’re into statistics, you can get the beginning calculation on your ratio and then re-calculate it each month as you make improvements to it.

Examine When You Pay

The other large factor that affects your credit score is how regularly you make payments on your credit bills and how long you’ve been doing so. Older folks (like me) have an advantage over youngsters in that we have longer credit histories but everyone is on more or less an equal footing when it comes to making regular payments. It’s all about consistency. So make sure you pay your bills and especially your credit card bills on time.

If you want to repair bad credit scores, you must make and keep making regular payments on your debts. If you fall behind 30, 60, 90 days or more, even on one bill, you’ll find it nearly impossible to improve your score. The whole concept of a credit score really is to help lenders and underwriters predict the likelihood of a person defaulting on a loan so this aspect of the score’s formula is pretty important.

Some Miscellaneous Considerations

A couple things to keep in mind as you follow your journey back to sound credit. Firstly, you don’t want to apply for any new credit while you’re rebuilding your score. Obtaining new credit like a merchant credit card for instance will be viewed by the credit bureaus as a negative. And especially stay away from what are advertised as bad credit score range loans.

Also, Even if you’re fed up with your bank or credit card company, don’t close a credit card account. Again, this is viewed negatively in part because you’re reducing your available credit and therefore increasing your debt to credit ratio.

Bring it on Home

It can take a while to repair that bad boy credit score (been there, done that). But I can tell you it can be done, no matter how dire your circumstances might look when you start. Lots of people have been in your shoes and found their way to a better place. You can too.

It won’t be easy; it will be messy. It won’t be smooth; it will be choppy with a lot of ups and downs. You won’t like it, but you will like the results. Because at the end of the journey you’ll be in a stronger, better place.

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bad credit score, bad credit score range, bad credit scores

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