Bad Credit Resource Center

The best course of action to take sometimes isn’t clear until you’ve listed and considered your alternatives. So this is the first step.

Once you have your credit report and your credit score, you’ll be able to tell where you stand and where many of your problems lie.  If you have a poor score, try to see in your credit report what could be causing the problem. Following are factors that affect your credit score.

- Too many unpaid bills? 
- Do you have too much debt? 
- Have you not had credit long enough to establish a good credit history?
- Have you recently faced a major financial setback such as a bankruptcy? 
- Have you defaulted on a loan, failed to pay taxes, or been reported to a collection agency?
 
The problems that contribute to your credit problems should dictate how you decide to boost your credit score.  As you read some of the posts in this blog, highlight or jot down some of the tips that apply to you, and from them develop a checklist of things you can do that would improve your credit situation. 

When developing your action plan, know where most of your credit score is coming from:

1) Your current debts (usually accounts for approximately a third of your credit score).  If you have lots of current debt, it may indicate that you are stretching yourself to thin financially so you will have trouble paying back the debt in the future.  If you owe a lot of money right now - particularly if you have borrowed a great deal recently - this fact will bring down your credit score.  Boost your credit score by paying down your debts as much as you can.

2) Your credit history (usually accounts for more than a third of your credit score).  Whether or not you have been a good credit risk in the past is considered the best indicator of how you will react to debt in the future.  For this reason, late payments, unpaid taxes, loan defaults, bankruptcies, and other unmet debt responsibilities will count against you the most.  You can’t do much about your past payment history now, but paying your bills on time - starting today - can help boost your credit score in the future.

3) How long you have had credit (usually accounts for up to 15% of your credit score).  If you have not had credit accounts very long, you may not have enough history to let lenders know whether you are a good credit risk.  That’s why lenght of credit history affects your credit score.  You can counter this by keeping your accounts open rather than closing them as you pay them off.

4) The types of credit you have (usually accounts for about one tenth of your credit score).  Lenders like to see a mix of financial responsibilities that you are handling.  Having bills as well as one or two types of loans can actually improve your credit score.  Also having at least one credit card that you manage well can help your credit score.

As you can see, because of different weights assigned, it is possible to only estimate how much a specific area of your credit report affects your credit score. Nevertheless, keeping these four areas in mind and making sure that each is addressed in your own plan will go a long way in making sure that your credit repair plan is thorough enough to boost your credit effectively.

The Best Ways to Boost Your Credit Score

Because of the way credit scores are calculated, some actions you take will affect your credit score better than others.  Generally, paying your bills on time and meeting your financial responsibilities will boost your score the most.  Owing a reasonable sum of money and being able to repay it will indicate to lenders that you take your finances seriously and pose little threat of defaulting on the money. 

Sometimes it’s tough to sort out all the details related to your credit score, so I hope you’ll have no trouble making sense of the information just presented.

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