Today, hundreds of thousands of American citizens deal with the unfortunate reality of having below-average credit. You may be one of them, but there is nothing to be ashamed about. To every problem, there is a solution, and if you are struggling with your credit scores, we’ll explore some options below on how you can begin boosting your credit score.
Why are My Scores Low?
There are a lot of factors used to calculate your credit score and there can be a few reasons why your score is so low. Simply looking at your scores on apps via Credit Karma or Experian won’t give the full picture of why your scores may be low. We recommend enrolling in a credit monitoring service that will refresh your reports on a monthly basis so you can see changes that are occurring as well as be able to see your extensive report across all three bureaus.
Once you have your report in front of you, the first thing you should definitely take a look at is any negatively impacting items. This will come in the form of delinquent or derogatory marks. Some of the most common derogatory marks include:
- Excessive Hard Inquiries
- Late Payments
- Charge-Offs
- Collections
- Medical Bills
- Student Loans in Default or Late
- Repossessions
- Bankruptcies
- Public Records
- Child Support
Having any of these marks on your report is definitely the main reason why your score is so low. Negatively impacting items have a severe effect on your credit report which is then factored into calculating your credit score. It is definitely recommended to take a look into potentially repairing your credit yourself, or hiring a full-service credit repair company to help you get these accounts off of your report.
My Score is Low with No Negative Items
After analyzing your report, if you don’t see any negatively impacting items on your credit report, your score may be low for 2 main reasons.
1 You may have a lack of credit history
2 You may have some really high credit card usage
A lack of credit history is uncommon but is definitely a contributing factor to why your credit score may be lower than it should be. You may have a credit card that you’ve never missed a payment with, which is great! But if that is the only account on your credit report, there is a lack of items that can contribute to building your credit scores higher. Having a diverse credit report with positive payment history will be the reason your scores begin to increase.
If you find yourself in the position of lacking credit history, explore the option of obtaining a secured credit card to add a new line of credit to your report to help increase your scores. Once you obtain new lines of credit, this will begin helping your score get higher and open the door for additional lines of credit.
High credit card utilization has the biggest impact on why your scores are low. Credit card utilization accounts for over 35% of your credit scores. Maintaining a low balance compared to your limit is vital to showcasing a strong credit score. Your credit card utilization is calculated based on the balance you owe compared to your limit. For example, if you have a $1,000 limit credit card and currently have a balance owed of $900, your utilization is 90%. The number to always keep in mind is to have your credit cards reporting with less than 30%, as the major bureaus deem that is very good credit card utilization.
What to Do if you Have Derogatory Marks and Delinquent Accounts
Derogatory and delinquent accounts are not fun to deal with. They report on your file and will continue to prevent your credit scores from achieving new heights. When a derogatory or delinquent mark is left on an account it will have an immediate negative effect on your report and lower your scores. However, once it does reach a derogatory account status (collection, charge-off, repossession, etc.) that account will not necessarily dock your score down for more points every month it reports. It begins to act like a limiter, capping your score because of the negative item will continue to weigh down your entire report.
If you find yourself struggling to deal with the constant calls from collection agencies, are settlement offers to outstanding balances, it is recommended to look into disputing accounts to get removed. Luckily, under the Fair Credit Reporting Act (FCRA) any account reporting on an individual’s credit report must be 100% accurate and verifiable to display. Over 70% of credit reports today contain inaccuracies. Definitely look into a reputable and effective credit repair company to assist you in resolving these accounts once and for all.
Credit Supreme offers the highest-quality credit repair service today. We dispute each and every negatively impacting item on our client’s credit reports within the first 24 hours of enrollment to ensure the fastest possible repair process. We also provide each of our clients with a 1-on-1 credit repair specialist whose job is to assist clients in the education aspect of credit, and make sure our clients take the best possible steps to improve their reports and scores fast. On top of that, we even back our clients with a 90-day money-back guarantee. No results, and you will be refunded your monthly payments back!
Conclusion
Having a low credit score is not the end of the world. There are plenty of reasons why your scores may be low and the first step you should take is analyzing your credit report. Once you understand why your score is so low, begin exploring options of what can be done to get your scores improved fast. Lacking credit history? Definitely look into obtaining a secured credit card to have new lines of credit reporting. Dealing with negative items? Reach out to a reputable credit repair company to see how they can best help you. There is always a solution to a problem and giving up on your credit will be more harmful than you think.