A bad credit score can have a negative effect on a business. Banking and finance professionals opine that anything below 680 in the FICO rating is considered to be poor. The average FICO score of americans is 680. This means having a credit score of 679 or less would be considered a low score. The most common method of calculating a credit score is with a formula developed by Fair Issac Corporation. The terms ‘credit score’ and ‘FICO’ are used synonymously in the industry. If an individual has a credit score below this level, he or she can expect to pay higher rates of interest and have a hard time in getting a loan approved by their banker.
Tips to Fix Bad Credit Score are Mentioned Below :
1. Credit Cards: Credit cards are your quickest way of establishing bad credit. Missed payments reflect badly on your credit report. Most credit card users tend to accumulate the amount that is repaid within a year. Some credit cards, especially store cards, carry very high interest rates. This can have a great impact on your credit score. Cut up these cards if you want to repair your credit. Some infringements take time upto two years to be removed from your credit report. Hence limiting the use of multiple credit cards is a good way to fix bad credits score.
2. Clear Outstanding Payments: Your bad credit will worsen if your payments are still outstanding. Negotiate with your creditor and clear the payments or consult a credit repair company to negotiate your settlements.
3. Find the Omissions: The law allows you to add information to your report that you believe will fix bad credit score. The information may be about the repayment of an outstanding loan, ‘good credit’ you have with companies that are unreported and salary hikes.
4. Pay Your Bills On Time: Delay in bill payments, even if only a few days late can have a negative effect on your FICO score. The longer you pay your bills on time the more your FICO scores should increase.
5. Delete Collection Accounts: Paying a collection account can actually reduce your credit score, as the credit scoring software reviews credit reports for each account’s last activity to determine the impact it will have on a credit score. Whenever you make a payment to your collection account, the collection agencies update credit bureaus to reflect the account status as “paid collection”. Due to this, the last activity becomes more recent. Since the guideline for credit scoring software is the date of last activity, recent payments on collection account damages the credit score more severely. The best way to deal with this dilemma is to contact the collection agency and tell them you are willing to pay off the collection account under the condition that they withdraw all reporting with the credit bureaus.
6. Don’t Let The Damage Spread Further: If your finances are in trouble due to a job loss or other factors, and affecting your ability to pay bills on time, you need to address this. Explain your situation to your creditors if you cannot pay your bills and negotiate lower payment terms or additional time to pay.
A bad credit limits your borrowing options greatly. Better the credit, better the conditions of lending and better interest rates. If you have bad credit you eliminate nearly 90% of the products immediately as most creditors do not want to lend money to someone who is a credit risk.
This Article was written by Curtis Parkhill. Visit our site at ( SaneCreditAdvice ) for more details.