Attacking Your Bad Credit Score

Chances are that if you have a bad credit score, it didn’t happen overnight. You probably had a pretty good score at one time but circumstances changed and your score changed with them. It took some time for your score to sink, but sink it did. And now you may think you’re stuck with it.

Well, that’s just not true. Credit scores rise and fall all the time for a number of reasons and your score is no different. So you can fight back, but understand that it will take some time and it will take some effort. In fact, it may take as much time to raise your score as it did to lower it. So you need to be frosty, focused, and have the fortitude to see it through.

Your First Step

You need to have a regular credit report. You can settle for the free reports you’re allowed to receive from the three credit bureaus (1 report each, 1 time a year for a total of 3 a year), or you can opt for a subscription to one of the big three. You can go off the rails for a $40.00 or more per month subscription or you can get a bargain basement special for around $10.00 a month. I say get the cheapest one possible.

Once you’ve gotten your hands on the report you’ll be able to see all the nasty little numbers that paint your credit picture. Prepare yourself! The first read is usually unnerving. Once you’ve gotten past the shock you can get on to the business at hand of improving it.

How Much You Owe

This is an important factor to understand. How much you owe in relation to how much you can borrow is called your debt to credit ratio. If this is high, meaning you’ve borrowed near your limits, then your credit score will suffer. If it’s too high, then your credit score will suffer dearly. To improve this factor, you should take a two-pronged approach.

First, pay down that darn debt. Don’t charge anymore and make more than the minimum payments wherever possible. You want to pay as much of it down as fast as you can so your ratio improves.

Second, try to raise your credit limits. A simple letter or phone call to your credit card companies might do the trick – all they can say is no. If you can get them to raise the limit then you’ve effectively improved your debt to credit ratio in very short order.

When You Pay

This is another big, big factor to get a handle on. If you haven’t already, you need to start a hitting streak. You need to start a streak of consecutive on-time payments to all of your creditors. You don’t want to miss a single one – ever. Even one “swing and a miss” is a huge setback to your credit score.

Once you’ve established several months of consistent payments, it will have a positive effect on your score. How many months will depend on how poor your performance has been previously. But this is one of the cornerstones of your credit recovery.

Avoiding Traps

Make sure that if you have a credit card or account of any kind, that you keep it open. You can pay it down to zero but don’t close it, even if you’ve had it with your bank. Closing off existing credit hurts your credit score.

Also, make sure you don’t go after any new credit cards or loans. The boys at the bureaus think this is a sign of trouble and will lower your score. Plus, if you apply and are denied they’ll also ding you.

It Bears Repeating

Remember when I mentioned fortitude at the top? I really meant it. Correcting your bad credit score is nothing if not a long-distance race. You need to pace yourself both physically and psychologically because there will be bumps along the way and you will get bruised.

So take it slow and steady. Divorce yourself from the outcome and concentrate on the next step. Don’t worry about what comes after that one, it will present itself. Learn to celebrate the little victories and take the setbacks in stride. If you can do that and stay the course, you’ll come out on the other end with a good-looking credit score and a whole lot of lessons learned.