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Finance

Credit Restoration: Tips for Improving A Bad Credit Score

Did you know that 16% of Americans have a very poor credit score while only 21% of Americans have an exceptional one?

Earning and keeping up with credit is difficult. If you are part of the statistic that has a poor credit score, don’t be ashamed. We understand how hard it can be.

Luckily, there are credit restoration tips out there to help. Read on to learn a few.

Keep up With Payments

Certain factors go into how your credit score is determined. Payment history is one of the most important factors.

If you want a chance at credit restoration, you must keep up with your payments. Although missing a few days of your payment is generally okay, you may experience additional late fees.

However, when it comes to your credit score, late payments aren’t reported to credit bureaus unless they are at least 30 days late.

To avoid missing payments by accident, set up automatic payments for the minimum amount due on loans or credit cards. If you don’t feel comfortable with automatic payments, set a reminder on your phone.

Focus on Past-Due Accounts

If you have any, focusing on past-due accounts can help with improving your credit score. A late payment can stay on your credit report for years to come and be the reason for a poor credit score.

In contrast, keeping all of your accounts up to date will help with your credit. If you are having the most trouble with this step, speaking to a financial expert about credit restoration can help.

Pay Down Balances

Even if you pay the minimum dues on time, your account balances may make or break your credit score. Another one of the factors that go into determining a credit score is credit utilization.

If you have a high balance and don’t pay the entire dues each month, it shows credit bureaus that you have a high utilization rate. This factor is generally based on credit card rates.

Avoid Opening a New Account

If you have a bad credit score, it may be tempting to open a new account to have a higher credit amount. However, having too many accounts open won’t give you a good credit score either.

A credit application is known as a hard inquiry. Although one or two may not drastically affect your credit score, they can add up faster than you’d think.

Plus, when you open a new account, you decrease the age of your other accounts on average. This is another factor that may hurt your credit score.

Do You Need Credit Restoration?

Credit restoration is not easy to handle on your own which is why we wrote this guide. The sad reality is that credit is easier to damage than to build.

If you are trying to up your credit score, using the tips in this guide can help. Our best advice is to speak with a financial professional that can tailor an individual credit repair plan to you.

If you want to read articles with other great tips, check out what we have on our blog.

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