A good credit score is vital if you want to make big financial moves.
However, if you’re on the edge of having a bad credit score, you can make decisions to improve it. One of the best ways to increase your score is to avoid the mistakes people have made with bad ones.
Here is some of the best advice for avoiding a bad score – from people who learned the hard way.
What are the top 3 financial regrets those with bad credit state they should have avoided?
1. Not paying their bills on time.
One of the biggest regrets someone with a bad score has is not paying their bills on time.
Not paying your bill will impact your credit score the most. On-time payments account for the highest weight when calculating your score.
Lenders view not paying bills on time as a huge indicator that you are not a responsible borrower. As a result, you are more likely to become delinquent, which is a high risk for the lender.
2. Having a high credit card balance.
Credit cards allow you to borrow money today to pay it back later.
All credit cards have a maximum amount that you can spend on the card. Many people with bad scores regret maxing out their cards and keeping a balance.
Your credit score calculation’s second-highest weighted category is around balance. When you have a high balance, lenders worry if you will be able to pay back what you owe.
3. Not reporting mistakes.
Many people with bad scores have errors on their credit reports that make their scores lower.
However, mistakes can happen to anyone and are something that each person has to check regularly.
People who have had a bad score because they didn’t report mistakes regret not knowing that there are free tools to use to check your credit report. Regularly checking your report will help you catch if a new card was taken out in your name with a balance – so you can report it!
What is the average time necessary to repair bad credit on an individual basis?
If you have a bad score, there are steps you can take to repair your score in 30 days to six months. The amount of time it will take to improve your credit score depends on two things:
- How bad your credit score is
- Why your credit score is bad
If your credit score is on the higher side of low, improving it will probably take a few mounts to improve. Usually, focusing on paying your bills on time and paying off large payments can help.
If your credit score is low, it will take longer to fix. You will need to show consistent good habits for a longer period of time. Usually, all aspects of your credit score are low, so just working on paying your bills on time and paying off large payments isn’t enough.
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Three facts that can save you from interest rates that can ruin your credit score.
1. Shop around for lower rates.
High-interest rates can make paying off debt challenging.
A high rate means you will pay more over time on the money you owe. To avoid a higher bill that you may not be able to pay, find the lowest interest rate you can. You can shop around at different banks for the best option.
2. Have a good credit score.
When you have a good credit score, you are more likely to be approved for a new loan and to have a lower interest score.
Conversely, you are less likely to be approved for a loan when you have a bad score. If you are approved, you will have a higher interest rate.
3. Save before using credit.
The best way to avoid the risk of having a bad score is to not use credit or use it less.
Instead, find ways to save money for small purchases that you can pay for in cash. Using credit for small purchases add up, and this can be avoided with proper planning.
Final Thoughts
Taking advice from people who have had bad credit scores can teach you a valuable lesson on how you can avoid one.
In addition, understanding how credit scores are calculated can help you pinpoint your exact efforts to improve your score.
