Down About Poor Credit? 7 Facts to Pick You Back Up

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Did you know that according to Credit Karma the average FICO score in 2017 for Americans was 700?

This can sound like a daunting number for someone that is in deep in debt, whether it be from student loans to credit cards.

There can be many problems that accompany a bad credit score, as it can have wide-reaching financial consequences.

Moreover, poor credit can feel a bit like a hole that you have no rope to climb out of. However, this is far from the truth.

While it isn’t quite effortless to get out of a bad credit situation, it is possible with a little bit of work, and self-discipline.

Read on to learn more about what exactly a credit score means, what constitutes a bad one, and seven facts about fixing a poor credit score.

What is a Bad Credit Score?

First and foremost, it is important to understand exactly what a credit score is before interpreting whether yours is good or bad.

A credit score, technically known as a FICO® score (named after the company that created it), is a three-digit score based on scoring models that look at your entire credit history. 

These scores range in values from 300 to 850, with a higher number representing a better score.

Essentially, a credit is what lenders use to determine how likely you are to pay off debt. 

A poor score is considered anything 579 or below, and this can be from a number of different factors.

Here are seven facts about how to fix bad credit if you among those that fall in this category, or in the fair category.

The Facts for Fixing Poor Credit

As you make the decision to really work on your financial fitness, it is important to do the research and to get all the facts.

Below you will find a few things to keep in mind as you embark on the journey of credit repair.

1. Regularly Check Your Score

Whether you have terrible credit or excellent credit, it is vital that you check your credit scores regularly. 

There are several websites currently on the internet that allow you to check your credit completely free of charge.

It is important to keep an eye on them to see any improvements that can be made, as well as to track your progress over time.

As well, if it has been a long time since you’ve looked at them, you are putting yourself at a disadvantage if you plan to make any big financial decisions in the near future.

2. Review the Score for Errors

As well as simply checking your credit scores, it is equally critical that you look for any potential errors or inaccuracies that the report finds.

This goes for any information that you believe cannot be verified, or is incomplete. 

Therefore, one of the quickest and most effective methods of improving your credit is to dispute errors that are listed on the report. 

3. Everything is Impacted by Your Credit

There is almost nothing that isn’t affected by your credit score, which can lead to a sense of despair and unhappiness if your score isn’t up to par.

Interested in renting an apartment? Credit check. Applying to a new job? Credit check? Applying for a loan from a reputable lender such as Bonsai Finance? Credit check. 

Therefore, while it can be tempting to put off your credit repair for the luxuries of life, it is not a great game plan. 

The time to fix your credit is now, and there really isn’t a way around that fact because the score infiltrates all aspects of our adult lives.

4. Debt Comes with Living Beyond Your Means

Though it can be hard to admit to ourselves, the most debt we accumulate comes from trying to live beyond your means financially.

While student loans and a mortgage can be the exception to this rule, generally speaking, debt is a tangible representation of poor financial habits.

However, these do not define you. In fact, your debt should be part of your wake call to help you really dedicate yourself to correcting these very habits.

5. Setting a Credit Strategy is Key

Once you identify your credit score and the relationship to any debts you owe or have owned, you can begin to strategize for a better future.

Carefully selecting the debt you choose is important because you must pay these regularly, and it is not an option to avoid debt altogether because this too can hurt your credit score.

Therefore, making a plan to pay any outstanding debts, as well as disputing inaccuracies is a necessary fact of repairing your poor credit.

Lastly, choosing your debts carefully and methodically in the future can greatly benefit your credit score.

6. Debt Consolidation is Helpful

If you owe more than you think you can handle, one possible solution is through debt consolidation.

This typically involves working with a company that specializes in paying all of your outstanding debts that are hurting your credit score and negotiating a payment through them to repair your score.

When you are in a situation that includes almost countless companies you owe, having one company for a duration of time can be a relief.

7. There are Many Bad-Credit Risks

Overall, it is very important not to deny the risk of bad credit. The reality is that this can greatly harm your quality of life, and interfere with your ability to reach your goals.

A poor credit score can make it impossible to get a fair mortgage or small business loan, as well as a fair car payment.

Moreover, it can even impact whether you qualify for student loans, which can limit your future career prospects.

Let the main takeaway of these facts be that this is not an issue to put off, but one to face head-on and as quickly as possible.

Live a Happier Life with Good Credit

A financially stable and secure life is not necessarily the same as a happy life, but it is difficult to enjoy your life when you live in the shadow of debt and poor credit.

Therefore, by consistently checking your score, debating errors, and following a strategy, you can slowly rebuild your credit score for a brighter future.

Interested in learning more about getting out of debt to overcome poor credit? Check out our recent article on 7 stress-free ways to become debt-free.