What a Bad Credit Score Means and How to Fix It
Immediately you take a credit card or a loan from the bank, the bank reports to the credit bureaus. they report both about your payment history and the amount of credit. The credit report contains medical bills information, utilities, and public records. So the credit bureaus will use the information from all the sources and calculate your credit score. the score ranges from 300 to 850 and is usually a three digits number. Credit bureaus set ranges for excellent, good, fair, poor and bad. If you score below 650, you are either at poor or bad.The scores with this range will make it difficult for you to get credit from any source. You can, however, fix the score.
The first thing you do is trim spending. Most people have monthly bills that are difficult to change like car payments, mortgage and many others. People spend their money on things they can live without or at least do with less. You can cut your spending by cooking at home. Eating outside your home increases your expenses. do away with all the useless subscriptions. By trimming the expenses, you will be able to free a lot of money that you can apply on debt and bills.
the second thing you do is updating your payments. Payment matters in terms of your credit score. Occasional late payment does not kill your score but late payments cause a lot of damage. If you are able to handle it financially, you can get your payments on the late accounts current. You can, however, aim to first pay the account that is most overdue especially if you are not able to get all of the currents at the same time. Your payment history will improve and raise your score once you focus on paying on time.
Focus on reducing your credit card debt. Most people make assumptions that they are fine if they stay under limits of their credit cards but the credit bureaus don’t see it that way. always resolve your debt in a collection since the credit bureaus dislike the accounts that are in a collection.
If you realize that your financial situation is messy and all the forward steps you make trigger new problems, it is important that you get outside help. You can go for a credit repair company if you realize that you are unable to control things on your own. The role of the credit repair companies is to negotiate for better terms on your behalf.
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Attributed by: additional hints