Your credit rating tells potential lenders how good your credit is in a single number. Anything below 675 is considered "bad" while anything below 620 falls under the heading "subprime," according to Fox Business News. Once you have discovered that you have bad credit, you will likely want to know what to do about it. Financial advice for bad credit ratings can vary from person to person, however there are some general guidelines.
What's in a Credit Score?
Paying your bills on time is the biggest part of a credit rating, to the tune of 35 percent. The ratio of the credit you have to the credit that you're using makes up another 30 percent of your score. How long you have had credit is 15 percent of your score, though there isn't much you can do about that. How long it's been since you last applied for credit and what type of credit you have complete the list at 10 percent each.
Credit Cards
Start paying down your credit card debt as quickly as possible. This will improve the ratio between how much credit you have available and how much of it you are using. Remember to make regular payments on time. If you don't have a credit card, get one. You can do this by getting a secured credit card. This requires you to pay some money up front, but can be worth it in the long run. Do not close unused accounts, as this will not help and may hurt your credit score.
Loans
Installment loans are one way to improve your credit rating fast. These are things like car notes and mortgage payments that you make every month. While getting such a loan with bad credit can be hard, it's not impossible. You can have a family member or close friend co-sign on a loan for you. There are also lenders that cater directly to subprime clients. Don't bite off more than you can chew, but do look for something you can afford to help repair your credit.
Credit Reports
Look at your credit report. Make sure that everything being reported on it is accurate.There are procedures in place to fix discrepancies and the law is on your side. Look at things like delinquent accounts and credit limits. From typos to miscommunication, there are a number of reasons that your credit score may be worse than it ought to be.
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