Steps to Repair and Maintain a Healthy Credit Score

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What Is a Bad Credit Score?

A bad credit score is typically a FICO® Score below 580 or a VantageScore® below 600. However, lenders may have different criteria for what they consider a bad credit score. Understanding where you stand can help you take steps to improve your credit.

Consequences of a Bad Credit Score

Having a low credit score can make it challenging to get approved for loans or credit cards. Even if you are approved, you may not qualify for the best rates and terms. Here are some potential consequences:

• Rejection when applying for credit, including mortgages, car loans, and credit cards.
• Difficulty getting rental applications approved.
• Required security deposits for utilities.
• Challenges in getting a new cellphone or phone contract.
• Potential issues during employment background checks.
• Higher insurance premiums in some states.

How to Improve a Bad Credit Score

Improving your credit score is possible with the right strategies. Here are some steps you can take:

1. Check Your Credit Score

Start by checking your credit score for free to understand where you stand. Your FICO® Score is influenced by several factors, including payment history, amounts owed, length of credit history, credit mix, and new credit.

2. Pay Your Bills on Time

Payment history is the most significant factor affecting your score. Set up autopay, change your payment due dates, set calendar reminders, or ask for help if you’re struggling to make payments on time.

3. Pay Down Debt

Work on reducing your revolving debt, such as credit card balances. Consider using the debt avalanche or debt snowball methods, or apply for a balance transfer credit card to pay off your debt without accruing more interest.

4. Limit New Credit Inquiries

Minimize new applications for credit to avoid hard inquiries, which can temporarily lower your score. Soft inquiries, such as checking your own credit score, do not affect your credit.

5. Boost Your Credit

Sign up for Experian Boost® to add positive payment history from utility, rent, and other bills to your credit file, potentially increasing your FICO® Score.

6. Get Help Building Credit

If you’re having trouble getting approved for credit, consider becoming an authorized user on someone else’s account, working with a cosigner, applying for a secured credit card, or getting a credit-builder loan.

How Long Does It Take to Improve Your Credit Score?

There is no set timeline for improving your credit score, but responsible credit behavior and positive payment history can lead to improvements within a month. Significant increases may take several months or more.

How to Maintain a Good Credit Score

Once you’ve improved your credit score, it’s essential to maintain it. Aim for a good FICO® Score (670-739) or better. Here are some tips:

• Pay all bills on time.
• Maintain low balances on credit cards.
• Only seek new credit when necessary.
• Keep your oldest credit card account open.
• Create a budget to manage your finances effectively.

The Bottom Line

Poor credit is not a reflection of your character; it’s just data about your financial history. It’s never too late to improve your credit score. Start with these strategies and use your newfound knowledge to maintain a strong credit score.

For any mortgage service needs, call O1ne Mortgage at 213-732-3074. We’re here to help you achieve your financial goals!

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