What Is Fixable Credit?

Not everyone has perfect credit -- the type of Fair Isaac Corporation (FICO) scores that get you the best interest rates on everything from homes to cars -- but you can improve your credit scores over time. Your FICO score is comprised of your credit score from each of the three major credit reporting agencies: Equifax, Experian and TransUnion. Those with the best credit have scores above 700 (850 is the highest score). At-risk consumers, those with scores in the 600 range, can take simple steps to improve credit ratings. Consumers with below-600 scores have the most work to do. Almost all credit problems are fixable over time if a consumer works to improve his credit rating.

Credit Blemishes

Many factors can lead to a reduced credit score. Paying a bill late, even just one or two times, can affect your credit score. Too much debt is another credit blemish, especially if much of that debt is high risk, such as charges to credit cards. The largest credit problems though are bankruptcy, foreclosure and multiple delinquent payments, especially those that are more than 90 days late.

Fixable Credit

Credit scores in the 600 range are not too difficult to fix. In 2010, 9.5 percent of Americans had scores of 600 to 649 and another 11.9 percent had scores of 650 to 699. Although getting loans in this credit range is possible, rates may be higher. Consumers in this credit range should be extra diligent about paying bills on time and maintaining a clear credit record so that their credit continues to improve and not slide below 600.

Difficult-to-Fix Credit

Credit scores of less than 600 can be difficult to fix, and getting credit back on track can take years. Chapter 7 bankruptcy, for example, stays on your credit report for 10 years; foreclosure and Chapter 13 bankruptcy remain for seven years. Even consumers who have claimed bankruptcy can bring their credit back to the 600 range in three to four years by paying bills on time and keeping credit card balances low. The 15.9 percent of Americans with scores of 500 or less in 2010 have the toughest challenge. Sub-500 credit scores are difficult to overcome -- and getting loans can be nearly impossible -- but are fixable over many years of careful credit planning.

Steps to Improve Credit

One of the best ways to fix a poor credit rating is to establish good credit habits. The Federal Reserve offers five tips for making the most of your credit score: Pay your bills on time, reduce your debt, establish a credit history, keep up with recent credit inquiries and diversify the types of credit you have open, but try not to keep to many unused accounts.