How to Know If You Need to Fix Your Credit

How much thought have you given to your credit score? It affects a lot more than you might realize. Having a good credit score allows you to get a car loan, buy a house or apartment and get a decent credit limit on a credit card. Unfortunately, if you have a bad credit score, you’ll have a harder time doing these things.

If you suspect that you a bad credit score, don’t despair. There are a few telltale signs of a bad credit score that you can watch out for. And there are things you can do to fix your credit score.

Warning Signs of a Much-Needed Credit Repair

If any of these situations have happened to you recently, you might need to repair your credit:

• Unable to rent an apartment.
• Credit cards have been closed.
• Have received offers for sub-prime credit cards.
• Are the victim of identity theft.
• Required to pay higher-than-normal interest rates.
• Have been turned down for a loan or a credit card.
• Lenders require you to have a cosign when you apply for a loan.

Types of Credit Scores

Before you check your credit score, familiarize yourself with the different score ranges. There are multiple models used to calculate someone’s credit score. Each model has a unique way of making that calculation and take different factors into consideration.

To check these scores, try using Credit.com. We’ll pull your credit info from Experian every 14 days and pull your Vantage 3.0 score, all for free. You can also purchase your FICO score when you sign up.

FICO Scoring Model

FICO is the most commonly used credit scoring model that ranges from 300-850. To achieve a high FICO score, you will need to have credit accounts and an excellent payment history. However, opening multiple credit accounts within a short period of time will hurt this type of score the most. The table below shows how they rank scoring.

760+                Excellent

700 – 759         Great

660 – 699         Good

620 – 659         Average

580 – 619         Poor

Below 579        Very Poor

It’s important to note that according to FICO, those with a credit score between 550 and 599 have a delinquency rate of 51%.

Vantage 3.0 Model

Your Vantage 3.0 credit score will be in the same number range as your FICO score. The biggest difference between the two is that a Vantage3.0 score ignores old debts that have been paid off, even if they’re recent. A letter scale is sometimes used for this score:

781 – 850         A

720 – 780         B

658 – 719         C

601 – 657         D

300 – 600         F

Experian

While Experian credit scores correlate strongly with FICO scores, they aren’t the same thing. The algorithms used to calculate each of them is different. It ranges from 330–830.

How to Start Working Towards a Better Credit Score

Once you understand if your credit is good or bad, you can begin improving it. There are both long-term and short-term ways to fix your credit score.

Disputing an Error

If you find any inaccurate information on your credit report, act immediately. The credit reporting company and information providers are obligated by law to fix any inaccurate or incomplete information on your credit report.

According to the Federal Trade Commission, there are two steps to take to dispute an error:

Step 1:Write a letter to the credit company about what information you believe to be inaccurate. Provide them with your complete name and address. Describe in detail the errors that you came across and what the true facts are. Request for them to dispute it.

Step 2: Tell the information provider about your dispute in writing. When you dispute an error with a credit company, they forward the data you provided to the information provider. They then review it and report back.

If you need help disputing these errors or pinpointing your credit issues, you can pay a reasonably small fee to get help with credit repair online through Credit.com.

Short-Term Fixes

The percentage of credit you’re using majorly affects your credit score. More specifically, it’s the percentage of revolving credit you have versus how much you’re actually using. The optimum percentage you want to have on your credit report is 30% or less. This is a combined usage of all open credit cards you have.

If you’re using multiple credit cards, your score will reflect the number of cards you use containing an unpaid balance. Pay off these balances as soon as possible and, if possible, try to use one main credit card. Once you have done so, only buy things that you can afford to pay off in a short period of time. That way, you won’t build up more debt. The last thing you need to do is to make payments on time consistently. Combine this with consistent and on-time credit card payments, and your credit score will slowly, but surely improve.

It might take a little bit of time and patience to get your credit score back up to a good standing. But it isn’t impossible. Simply put conscious effort into improving your credit score, and you’ll be there before you know it.

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