Having bad credit can drag you down and seem like an insurmountable obstacle keeping you from your financial dreams. The stress of not having good credit can feel overwhelming and paralyzing – until now. With the right support, guidance and a clear plan of action, it is possible to turn your adverse credit situation around.
In this article, we will provide the knowledge needed to start improving your credit score today. Learn how to increase your chances of loan approval, find out which debt relief strategies work best for different situations and unlock doors to more economic opportunities with better access to capital. Don’t let poor credit prevent you from making progress in life – take control and make positive changes starting now.
Understanding Your Credit Score
You may have heard the term “credit score” before, but do you really know what it means? A credit score is a three-digit number that reflects how trustworthy you are in paying back debt. It’s calculated based on information in your credit report, including your payment history, credit utilization, and length of credit history. Let’s get into the details to better understand why this score is so important.
How Credit Scores Work
Your credit score is determined by five factors that make up the biggest components of your credit profile. They are:
- Payment History (35%) – This includes whether you pay bills on time or late and any bankruptcies or liens against you.
- Credit Utilization (30%) – This looks at how much of your available credit you use. The lower the amount that is used, the better your score.
- Length of Credit History (15%) – This considers how long accounts have been open and active, as well as any new accounts added recently.
- New Accounts (10%) – This measure looks at the number of new accounts opened in the past year and their impact on your overall score.
- Credit Mix (10%) – This factor assesses whether you have different types of accounts, such as loans and credit cards from different lenders or creditors. Having a mix can be beneficial to your overall score.
Understanding these factors can help you learn more about how lenders view your financial situation when evaluating applications for loans, mortgages, and other forms of financing. By taking actionable steps such as making timely payments and keeping utilization low, you can start to increase your credit score over time.
Check for Errors and Dispute Them
Have you ever seen your credit score and wondered how it got so low? Perhaps an error or inaccuracy is to blame. You may not know it, but you can actually request a free copy of your credit report from each of the three major credit bureaus (Experian, Equifax, and TransUnion) and check it for errors. If you find any errors in your report, dispute them with the respective bureau so that they can investigate the issue. It’s important to do this in order to protect your credit score and ensure that it accurately reflects your financial history. Let’s go through how this works.
What is a Credit Report?
A credit report is a document used by lenders to assess a potential borrower’s creditworthiness. It includes information such as the borrower’s payment history, current balances on loans or lines of credit, open accounts, bankruptcies, collections, judgments, foreclosures, and other relevant financial data. This data is collected from various sources such as banks, creditors, government agencies, and employers. The data is then compiled into one comprehensive report that lenders use to make decisions about whether or not to extend credit or approve loan applications.
Check for Errors in Your Credit Report
It’s important to periodically check your credit reports for errors since inaccurate information can have negative effects on your overall score. Errors could include incorrect late payments or collections accounts that are outdated or no longer belong to you. You should also be aware of “mixed-file” errors, which occur when two different people’s files are merged together in the same report due to similar names or addresses. In these cases, it’s important to dispute the mistake with the appropriate bureau right away so that you don’t suffer any long-term damage caused by inaccuracies in someone else’s profile being associated with yours.
Dispute Errors With the Appropriate Bureau
If you find an error on one of your reports, it’s important to dispute it with the appropriate bureau as soon as possible so that they can investigate the discrepancy and correct any mistakes found during their investigation. The process usually only takes a few weeks at most but can take up to six months, depending on how complex the case is determined to be by investigators at each bureau’s office. When disputing an erroneous entry on your report, remember that patience is key; getting results quickly is unlikely unless there are extenuating circumstances involved, such as identity theft or fraudulently opened accounts under your name without permission given by yourself beforehand (in which case you’ll want to contact local law enforcement immediately).
Don’t Let Late Payments Hold You Back
Late payments can have a significant impact on your credit score, making it harder for you to access the resources and opportunities you need in life. But don’t worry, there are ways that you can make sure you never miss a payment again.
Set up Automatic Payments
One way to make sure that your bills are always paid on time is to set up automatic payments. This means that the money is taken out of your account each month automatically so that you never have to worry about forgetting or being late with a payment. Most companies will offer this service, and it’s easy to set up through online banking or by calling customer service.
If automatic payments aren’t an option for you, then setting reminders might be the way forward. You can use apps such as Google Calendar or Apple Reminders to set up notifications when it’s time for your bills to be paid. You could also add them into your daily routine – for example, ‘Pay my phone bill every Monday morning before I walk the dog’ – this way, it becomes part of your regular habits and is easier for you to remember.
Finally, if all else fails, make sure you’re prepared in case something unexpected happens that causes you not to be able to pay a bill on time (e.g., illness). Always keep some savings aside in case of emergencies so that if something does happen, at least you won’t miss any more payments due to a lack of funds. That way, even if something goes wrong, your credit score won’t suffer as much as it would otherwise have done.
How to Keep Your Credit Card Balances Low
There’s one thing that you can do that will help you maintain a good credit score without having to make any major lifestyle changes: keep your credit card balances low. The lower your balances, the better off you will be in the long run.
Why It’s Important to Keep Credit Card Balances Low
When it comes to keeping your credit card balances low, there are a few key reasons why it’s important. First, high credit card balances may be an indication that you’re overextended and may struggle to make payments on time. This could lead to late fees, increased interest rates, and other costly penalties. In addition, high credit card balances can also have an impact on your credit score by lowering it significantly. So if you want to maintain good credit, keeping your card balance under control is key.
Tips For Keeping Credit Card Balances Low
Keeping your credit card balances low can be easier said than done, but here are some tips that might help get you started:
- Pay off debt as soon as possible – If you have multiple cards with outstanding balances, prioritize paying them off as soon as possible. This will help keep the overall balance down and prevent any additional interest from accruing on top of what you already owe.
- Use only one or two cards – When possible, try not to use more than two cards for purchases and limit yourself to only using those two cards for everything else (e.g., rent/utilities). This will help keep all of your expenditures organized and make tracking payments easier in the long run.
- Set up payment reminders – Setting up reminders for due dates is a great way to stay on top of payments and avoid late fees and other charges associated with missing deadlines. Plus, it’s an easy way to ensure that all bills are paid on time every month without having to manually check each account every single day!
Keep Credit Card Accounts Open For A Better Credit Score
It’s natural to want to close old credit card accounts if you don’t use them anymore. However, closing those accounts can have negative implications on your credit score. Keeping old credit card accounts open can actually demonstrate a lengthy history of responsible credit management. Here are three reasons why you should keep your old credit card accounts open.
Establish a Long Credit History
A major factor in determining your credit score is the length of your credit history. This means that the longer your history is, the better your score will be. By keeping old credit card accounts open, even if you do not use them, shows that you have been managing and using credit responsibly for a long time. This will help boost your overall score and prove to creditors that you are trustworthy when it comes to managing debt.
Maintain a Low Utilization Ratio
Your utilization ratio is another key factor in determining your overall credit score and is calculated by dividing the amount of debt you owe by the total amount of available credit you have access to. The lower this ratio is, the better off you will be, so having access to more available lines of credit helps keep this ratio low, which in turn boosts your overall credit score. Keeping old cards open with their associated lines of available credit intact helps maintain an ideal utilization ratio while also showing creditors that you can manage multiple lines of debt responsibly over time.
High Available Credit Limit
Having high available lines of credit raises another important factor known as ‘total limit’ or ‘available limit,’ which also plays an important role in calculating one’s overall credit score as well as other financial metrics such as loan eligibility etc. Having higher ‘total limits’ gives creditors an idea that you have access to more money than what you are utilizing, making you less likely to default on payments and therefore raising your financial credibility in lenders’ eyes, resulting in better loan/credit eligibility decisions in future times when needed.
Applying for Credit the Smart Way
When it comes to credit, everyone has heard of the importance of having good credit. But what many don’t know is that every time you apply for new credit, it shows up on your credit report and can actually lower your score. It’s important to be strategic about when and how you apply for new credit, so let’s take a look at what to keep in mind when applying for new lines of credit.
Rules of Thumb for Applying for Credit
When it comes to applying for new credit, there are a few rules that everyone should follow. First, only apply for credit when you need it. Don’t just apply because you can; make sure you have a purpose in mind or a plan for how you will use the money if approved. Second, avoid applying for too much credit in a short period of time. This could signal to lenders that you are desperate and overextended financially.
Keep Your Credit Score in Mind
It goes without saying that your credit score is important when trying to get approved or denied by a lender; however, it’s also important to consider its effects beyond just whether or not you qualify for the loan or line of credit you applied for. For instance, if your score isn’t where it needs to be, some lenders may increase interest rates on loans or offer higher fees than someone with better qualifications — which can add up over time. This means even more money out of pocket than expected down the line.
It is important to be mindful of your credit score and strive to make improvements whenever possible. By following the tips outlined in this article – checking for errors in your credit reports, making payments on time, keeping credit card balances low, and exercising caution when applying for new credit – you should be able to take control of your financial future and create a healthier financial profile.
Credit scores can be shaped by us in many positive ways over time. Take advantage of every step you can take towards improving your creditworthiness today, and let The Ascent Network help you get there. Improving your credit score can lead to more opportunities down the line. Don’t continue to let your existing credit score hold you back from obtaining future goals, a dream house, a car, or even that vacation of a lifetime. With hard work, dedication and help from The Ascent Network, you will soon find yourself on the optimal path for achieving a new level of success.
THE ASCENT CREDIT REPAIR ADVANTAGE
Credit problems can affect your entire financial picture. If you’re falling behind on a credit card or mortgage payments, you could be negatively affecting other areas of your financial life.
That’s why we’ve developed a full-scale credit repair solution that addresses the problems you currently have, and those you may not have anticipated. At ASCENT, we approach your financial landscape with foresight, to assure financial recovery, and long-term financial stability.
Many of our clients have experienced substantial increases in their credit scores, have modified their home loans, have significantly lowered their monthly mortgage payments and changed their overall credit status in ways they never thought possible.