How To Fix Your Credit Score – And Get Access to Credit ASAP!

A credit score is a number between 300-850 that demonstrates your creditworthiness. Basically, your credit score is the number that lets lenders know whether you are a good candidate for borrowing credit and the rates at which you will be able to borrow.

Your credit score affects much of your financial life so it is important to learn how to maintain good credit. If you have bad credit, do not give up. You can still learn how to fix your credit ASAP.

1. Why Is My Credit Score Important?

Your credit score tells lenders whether they should let you borrow money for many important things, including opening credit cards, buying a house, renting an apartment, and leasing a car. The most common credit score model was created by Fair Isaac Corporation, which is commonly known as FICO. The FICO system ranks your credit on a scale of 300-850. 

The higher your credit score is, the better you look to lenders. Here is a breakdown of the FICO credit score ranking system.

  • Excellent: 800 to 850
  • Very Good: 740 to 799
  • Good: 670 to 739
  • Fair: 580 to 669
  • Poor: 300 to 579

In order to find out your credit score you will need to do a credit score check.

 
 

You can do this quickly for free by requesting a credit report through websites like Credit Karma or you can request an official report online via the Annual Credit Report Request Service. You can also call them over the phone at 1-877-322-8228. 

Do not beat yourself up if you have a poor credit score. Many people do not learn about credit until they have already made choices that have lowered their credit scores. However, if you have good credit it will be much easier to reach major financial milestones, such as buying your first home or leasing a vehicle.If you have a low credit score it is important to take steps to improve it.

You can still repair your credit, discover what it takes to raise your credit score.

2. What Steps Can I Take to Fix My Credit Score?

A bad credit score is not a life sentence, there are steps that you can take to raise your credit. First, it is important to know what could have led to your poor credit score. With this knowledge, you can make changes that are necessary to get your credit score back on track.

One reason may be that you have defaulted on school loans. School loans are considered “good debt” until you miss too many payments. This means that your credit score should not be affected by the amount of education loans you have taken out unless you continuously skip your loan payments. When this happens, it is known as defaulting on a loan. Going into default will lower your credit score. 

You have accumulated high credit card balances. Maxxing out your credit cards by reaching their limit is a main factor of low credit rankings.

Your property has been foreclosed on. If you cannot make payments on your home or other property for a long time, then eventually your mortgage lender may take ownership of that property in order to sell it to recoup the money that you owe them. This is known as a foreclosure and it negatively affects your credit.

Now that you know the actions to avoid to have good credit, here are some of the steps you can take to repair your credit.

 
 
  1. Request your credit report so that you are familiar with your credit score.
  1. Check your report for errors. It is estimated that as many as 25% of credit reports contain errors. If you think you have a mistake on your report, you can contact a credit bureau to file a dispute.
  1. Pay off debt whenever possible. It is especially important to pay off your credit cards on time. Be careful with credit limits, do not spend money just because your line of credit increases.

Once you pay off a credit card, do not close it. Having paid off, but active, credit cards will help improve your credit. Closing cards can make it difficult to build a healthy credit history.

Learn about the credit bureaus that create your credit report.

3. What Are The Major Credit Bureaus?

A credit bureau, also known as a credit reporting agency (CRA), is a company that collects and maintains credit information on you and millions of other consumers. When you apply for a line of credit or a loan, your prospective lender will want to know about your credit history, including whether you have borrowed money in the past and if you made payments on time.

Credit bureaus provide this information to lenders and they provide you with your credit report. There are three major credit bureaus: Equifax, Experian, and TransUnion. These for-profit companies are the main sources for lenders to obtain information on your credit history and for you to receive your credit report.

Historically Equifax, Experian, and TransUnion were legally required to provide all consumers with three free credit reports per year, upon request. Due to the financial instability caused by Covid-19, all three of these credit bureaus are currently offering consumers free weekly online credit reports through April 2021. 

Remember, in order to learn your official credit score you will need to request a credit report from one of these credit bureaus. If you want to, you can get all 3 credit scores (one from each bureau) to compare the numbers. 

Here is the online process to request your credit report:

 
 
  1. Go to the official website of the Annual Credit Report Request Service to fill out the form to request credit reports.
  1. Pick whether you want to request a credit report from Equifax, Experian, TransUnion or all three credit bureaus.
  1. As a final step, you will need to answer a few verification questions. These will be personal identification questions that only you should know the answer to.