How to Fix Credit Scores

Credit scores are measured by the Fair Isaac Corporation (FICO) scoring model.

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According to this model, the score range lies between 350 and 800–the higher the score, the better it is for a consumer.

A score of 700 or above is considered excellent, but most people have a credit score between 670 and 739, which is fairly good. Any score below 670 needs to be fixed; if that’s the case with you, you'll find this post useful. 

Here, we've enclosed some easy ways of fixing bad credit scores as well as why it’s important to consider hiring one of top credit repair companies in San Diego if you need help in doing so.

Why Improve Your Credit Score?

Before we dive into how you can fix your credit score, let's discuss why you should bother. Here are some important benefits of improving your credit score:

Better Borrowing Opportunities

If you have a good credit score, decent repayment history, and faultless credit report, you can easily avail of any loan or borrowing program you wish. 

Banks and lenders will easily approve your loans because a high credit score reflects that you’re a responsible person when it comes to loan repayment, and thus a lower risk for the lender. You can also avail of useful loan terms like low fixed-rate mortgages.

Lower Interest Rates

Because people with good credit scores are deemed to be more reliable, lenders are lenient with interest rates. If a person with a credit score of 660 gets an interest rate of 4.76% on a 30-year fixed mortgage, a person with a credit score of 760 can get the same at a 4.16% interest rate. 

On the surface, there's only a 0.6% difference. However, the lower interest rate saves a decent amount of money in the long run.

No Security Deposits With Utilities

It’s not only loan lenders who check your credit score–utility companies also often check the credit history of customers. This is to ensure that the customer will pay their bills timely at the end of the month.

If you have a good credit score, utility companies won't bother you. But if you have bad credit, they may ask you to submit a security deposit. It's not going to be a huge amount, but for those who live paycheck-to-paycheck with low savings, this is bad news. 

How to Fix Credit Scores

Now that you understand why it’s important to fix your credit score, let’s discuss a few ways you can do it:

Pay Bills on Time

Your bills represent a large part of your credit score, as they reflect how responsible you are with finances. 

So, one good way to improve your credit score is to pay all your bills on time. If you're looking forward to immediate results, you can expect a slight rise in your credit score thirty to forty-five days after you begin paying bills on time.

Avoid Taking Debts

Debts can lower credit scores significantly even if you pay your bills on time. So, you should avoid taking two or more loans at once and avoid borrowing huge amounts if you want to fix your credit score. 

If there's an emergency and you have to borrow money for some reason, try your best to pay it off as soon as you can. The longer you have the debt on you, the lower your credit score will be.

Avoid Changing Accounts

If you open and close accounts too frequently, the credit bureaus can perceive this as a sign of instability, and this could lower your credit score. So, be sure to avoid changing your bank accounts and stick to having only one or two accounts.

Evaluate Your Credit Report

Sometimes, your low credit score is not your fault but that of the credit bureaus. They may miscalculate or make errors in your credit report, which lowers your score. So, make sure you regularly check your report by yourself. 

Avoid Sending Out Credit Applications

Be careful about the frequency of your credit applications. Each time you request a loan, it is recorded in your financial activity. A greater count of credit applications means a lower credit score.

Also, avoid sending out a credit application to a second lender unless you receive a response from the first one.

Hire Professionals

Sometimes, conservative measures like paying bills on time are not enough to get full credit restoration. In this case, it’s important to hire a professional credit repair service, especially one that uses attorneys to augment the process, like The Phenix Group.  This is because attorneys are not only acquainted with the latest credit laws, but they can also better answer tricky questions like how long a repo might stay on your credit. For all credit repair questions and concerns, contact The Phenix Group today!

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