Fix Your Bad Credit In 2022
Is one of your goals for the new year to fix your bad credit? You may be happy to hear it doesn’t have to be as difficult as you may think. We have a few tips and ideas to help you increase your credit score in 2022.
Why Is Your Credit Score Important?
Credit scores play a huge role in deciding whether or not you qualify for a loan and what type of interest rate you’ll get. The higher the score, the lower your interest rate. However, if you have fair or bad credit, you will have a much more difficult time getting approved for a loan, and if you are, you will likely have to pay a higher interest rate since you will be considered a more risky borrower.
What Is Considered Bad Credit?
Credit scores range from 300-850. Borrowers with scores of 781-850 will have access to the best interest rates and terms. On the other hand, borrowers with scores of 660 or under will have a more difficult time qualifying for a loan and, depending on the circumstances, should work on fixing their bad credit.
What Is My Credit Score Based On?
Your credit score is based on the following factors:
- Payment History – Your monthly payment history for the last seven years makes up this portion of your credit score. Every time you have a late payment, it will show up in this section.
- Amounts Owed On Accounts – This will show how much you owe in relation to the credit limit or original loan amount.
- Length of Credit History – How long you’ve had each account.
- New Credit – How many new accounts you have taken out.
- Credit Mix – Creditors like to see a mix of revolving credit (credit cards) and installment credit (auto loans and mortgage).
In addition to the factors listed above, having things like judgments, foreclosures, and bankruptcies can also impact your credit score and play a huge role in determining your creditworthiness.
How Can I Fix My Bad Credit?
The first step in fixing your bad credit is to take a look at your credit report to make sure it accurately depicts your borrowing and payment history. You can request a consultation with The Credit People to go over what is on your report. If everything is accurate, you can implement a plan on what areas need the most attention.
Some of the most common ways to quickly improve your credit score is by paying down balances on revolving credit accounts. You should aim to have a balance no higher than 30% of the credit line. You should also do everything you possibly can to make your monthly payments on time.
Let’s Get To Work!
Making small changes to how you spend money will make a huge difference in fixing your bad credit. If you’re serious about making these changes, get in touch with our partners, The Credit People, or call them at 970-512-5993, so they know we sent you. If you work with them and follow the personalized plan they put together for you, your credit will improve in no time!