We need to talk about credit scores.
Unlike age, it is not just a number.
For adults, it affects nearly every aspect of your life — whether it’s buying a car or house, renting an apartment, and sometimes, employment.
If your credit is good, you can go get the above mentioned things fairly easily.
But if your credit is bad, good luck. I’m not trying to be flippant, it’s just the hard truth.
Don’t worry, bad-credit-havers — you’re certainly not alone, and we’re here to give you some tips on how to get your score back up.
My Credit
My identity was stolen 10 years ago, but I wasn’t aware of it.
Yes, I got a letter from The University Of Pennsylvania Hospital alerting me to a “data breach,” but didn’t worry about it.
I should’ve worried about it. Like, defcon one alarm worried about it.
Silly me, just going about my life unaware that my social security number was floating around out there for anonymous thieves to use.
Whomever dragged my credit to hell are still anonymous to me, even though I feel I should be given the information of who they were. Because of some weird rule, even if they caught the person or people, I’m not privy to that info.
Even though they had ALL my info. So much info that they took out a lot of payday loans, opened credit cards, and applied for several mortgages — all in my name.
One of the mortgages was in Oklahoma. I HAVE NEVER STEPPED FOOT IN THAT STATE let alone thought about putting down roots there. And I had no idea this was taking place until I went to buy a car.
My credit was in the toilet.
After the shock wore off, I got a copy of my credit report and wooooo boy it was a lot. Trying to be a big girl, I took all the necessary steps — disputing charges, putting a lock on my credit so no new accounts could be opened, etc.
But the damage had been done, and it was a nightmare. The calls from creditors were nonstop, and my saying “Hey my identity was stolen” did not fly with them.
It became so overwhelming that I hired a lawyer who specializes in identity theft — 7 years later, my credit is rebounding.
Low Or Bad Credit
The first problem is the government can’t give you a new SSN, which would have solved everything.
After all, no credit is better than bad credit.
Unfortunately, that’s not an option — but there are ways to boost your score.
Bad credit can (and does) happen to everyone. And since there’s a stigma of shame surrounding it (weird), let’s delve into the reasons your score can plummet.
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In reality, people lose jobs. Lost jobs equals less or no income, which can lead to eviction.
Divorce is another cause, as are medical bills, late or no credit card payments, even a bad roommate situation — all of these can result in dings or severe drops to your credit score.
Okay, so your credit score has taken a turn for the worst – how can you get it back up to a reasonable number?
Tip 1: Review Your Credit Report
First off, request a copy of and review your credit report. You can obtain yours for free by clicking here.
Check For Inaccuracies
When reviewing your credit report for inaccuracies, look for:
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Incorrect personal information (e.g., misspellings, wrong addresses)
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Accounts that don’t belong to you
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Missing accounts that should be listed on your report
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Incorrect public records (e.g., bankruptcies, foreclosures)
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Accounts that aren’t accurate (e.g., they say they’re open when they’re actually closed)
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Accounts listed as “closed by grantor” (meaning the lender closed the account on you)
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Duplicate accounts
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Data management errors
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Delinquencies or derogatory marks
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Fraudulent activity
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Incorrect inquiries
If you find an error, check to see if it shows up on two other reports produced by the major credit bureaus — the three are Experian, TransUnion and Equifax.
There can be a major improvement of your credit score by fixing simple errors — and it’s a quick, easy way to get your score on the rebound in a relatively short period of time.
Dispute Inaccuracies
If you’ve found mistakes on your report, you need to dispute them by reporting them to the credit bureau where you received your report.
You can file your free dispute with:
Experian Disputes
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By phone: 800-916-8800
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By mail: Experian, P.O. Box 4500, Allen, TX 75013
Equifax Disputes
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By phone: 866-349-5191
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By mail: Equifax Information Services LLC, P.O. Box 740256, Atlanta, GA 30374
TransUnion Disputes
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By phone: 800-916-8800
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By mail: TransUnion Consumer Solutions, P.O. Box 2000, Chester, PA 19016-2000
In addition, contact the lender or creditor that issued the account to let them know you’ve challenged the error.
They can correct the information on their end, which should update all of the three main credit reports. In most cases, you should hear a response to your dispute within 30 to 45 days.
Tip 2: Pay Late Or Past-Due Accounts
Paying bills on time is key — until a payment is 30 days past due, it isn’t considered late by the credit bureaus.
However, once a payment is beyond 30 days past due, creditors and lenders can report your account to the credit bureaus — which ultimately impacts your score and creditworthiness.
The longer your payment is overdue, the worse it is for your credit. Late payments can stay on your credit report for as long as seven years, so it’s important to pay them off sooner rather than later.
If an account has a past-due balance of more than 30 days, a creditor may turn the account over to a collection department — they will attempt to recoup the money directly from you.
This is a danger zone you want to avoid if possible — when an account is sold to a collection agency, the account could be noted on your credit report, often having a hugely negative impact on your credit score.
Tip 3: Increase Your Credit Limits
Experts suggest asking your creditors to increase your credit limits on your existing accounts.
This is because the percentage of your credit limit being used impacts your credit score, both negatively and positively.
For instance, if you have $8000 racked up on a credit card and the limit is $10,000, it looks worse to lenders than if you have $8000 on a card with a $25,000 limit — your debt appears to be lower.
If they grant an increase, it could improve your credit score, and give you time to pay on your balance.
Tip 4: Pay Off High-Interest, New Credit Accounts First
There are two main approaches to take when you have multiple balances to pay.
You can pay off the account with the highest interest rate, such as a card with a 14.5 percent APR before paying on a balance with only a seven percent APR.
Or, you can pay off an account with the lowest balance first, so that balance no longer incurs interest.
Tip 5: Open a New Credit Card
While it might seem counterproductive, a new credit card increases your total available credit, which impacts (and usually lowers) your credit utilization ratio.
You don’t have to use the credit card, but if you do, only use it for small purchases that you can pay off.
And the smaller your ratio, the better your credit score.
Tip 6: Pay Balances On Time
Paying off what you owe is an important part of repairing your credit.
By making payments on time, you show current creditors that you are a responsible borrower and they can feel confident lending to you in the future.
Whether it’s your credit card payment or utility bill, be sure to pay on time. You can set up automatic monthly payments to make this a consistent habit if you have the available funds!
Tip 7: Get A Personal Loan
Take out a personal loan with a company like CreditNinja, an “All credit scores welcome” establishment, but only use the money if necessary.
If you make payments for 3-6 months and then pay it off in full, it will boost your credit score.
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It is necessary for some to use personal loans as a means to pay off their credit card debt. By doing so, they only have to worry about paying off one loan instead of several credit accounts, most of which have large interest rates that continue accruing the longer you have a balance.
Be sure to check that the terms of a personal loan allow for paying off credit card debt — some do not. By doing this, your credit score will jump as you’ve just eliminated your credit card debt in one fell swoop.
Tip 8: Use a Local Credit Union
Local credit unions are much more liberal with credit terms and unlike institutional banks, can make their own.
Bad credit is not a definite deal breaker at a credit union, where they consider your entire financial picture in addition to your credit score and report when processing a loan application.
“Credit unions’ low financing rates and fees and member-focused services make them an attractive option for anyone. Their flexible lending terms and tools for building credit make them an especially good option for borrowers with fair to poor credit,” according to Experian.
Tip 9: Refinance Or Consolidate Student Loans
Many struggle keeping up paying exorbitantly high student loans, causing them to fall behind with other bills, meaning, you guessed it — a credit score drop.
A solution to this might be to refinance or consolidate them — allowing you to bundle all your payments into one.
“If you’re having trouble affording your student loan payments, loan refinancing and consolidation are two options you might be exploring. Both can simplify your loan repayment and reduce your payments, but they share few similarities beyond that,” says Experian.
“There is another option you can explore, and that is checking if you have a forgivable student loan.”
Refinancing replaces one or more existing loans with a new one through a private lender, while consolidation goes through a program with the federal government and is only available for federal student loans.
For a complete summary of how it works, click here.
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It’s Complicated
We’ve thrown a lot of information at you and credit scores are complicated.
There are no immediate fixes, but it is realistic to get that score back to a good, or at least fair, level.
You CAN get out of the bad zone — it takes diligence, a little research, a lot of phone calls, and possibly help from an expert if your identity has been compromised, but you can do it.
Now, stop reading this and go take care of your credit score, friend!
Do you have experience with bad credit? What’s your best advice for how to increase a credit score? Share your story in the comments below!
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