Wednesday, November 29, 2023
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8 ways to fix a ‘bad’ credit score

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In 2020, US consumers had an average of $5,315 in credit card debt and were using 25% of their available credit. Though last year’s figures were lower overall than they were in 2019 — likely due to disruptions from the COVID-19 pandemic and lockdowns across the country — individuals with very poor credit were found to have the highest credit utilization rate. (Your credit utilization rate is how much you currently owe divided by your credit limit.)
Translation: Those with low credit scores are carrying the bulk of credit card debt in the US.
A low credit score can keep you from getting the best rates on loans and credit cards, leading you to pay higher interest rates or be ineligible for credit offers. You could also have a hard time getting approved to rent an apartment or get utilities. In some instances, a below-average credit score can also affect your job prospects. But if your credit score is lower than you’d like, it is possible to rebuild your credit and improve your score. We’ll explain how.
How your credit score is calculated
Before you can repair your credit, it’s important to understand how your credit score is calculated. Data from your credit report, which contains information on any credit accounts such as credit cards, car loans, student loans and more, is used to calculate your credit score. This data is reported to the three major consumer credit bureaus: Equifax, Experian and TransUnion. (You might have three different credit scores with each, because not all lenders and creditors report to all bureaus, and they don’t always report at the same time each month. The scores will usually be similar, though.)
For the purpose of this article, we’ll be referring to your FICO score — one of the most popular credit scores — which is divided into five categories:
35% payment history: Your past pattern of payments (on-time or late) and amount paid (minimum due, full balance or another amount) can raise or lower your credit score.
Your past pattern of payments (on-time or late) and amount paid (minimum due, full balance or another amount) can raise or lower your credit score. 30% amount owed: The balance you carry on all accounts compared to the amount of credit available to you makes up your credit utilization rate. Your credit score will improve as this rate decreases.
The balance you carry on all accounts compared to the amount of credit available to you makes up your credit utilization rate. Your credit score will improve as this rate decreases. 15% length of credit history: The longer you’ve owned a credit account, the more your credit score will increase.
The longer you’ve owned a credit account, the more your credit score will increase. 10% new credit: When you apply for new credit, the card provider will likely pull your credit (also known as a hard inquiry), which can cause your score to temporarily drop by a few points. However, if you’re approved for a new card, your score is likely to go up, offsetting this temporary dip.
When you apply for new credit, the card provider will likely pull your credit (also known as a hard inquiry), which can cause your score to temporarily drop by a few points. However, if you’re approved for a new card, your score is likely to go up, offsetting this temporary dip. 10% credit mix: This is the variety of credit you hold (student loans, credit cards, student loans, etc). When you apply for a new type of credit account, it could boost your score.
Your credit score is continuously updated as your credit profile changes. FICO scores are between 300 and 850. Credit scores between 300 and 499 are considered

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