Improving A Low FICO Score And Building Better Credit–How Consumers Establish A Positive Credit Rating And Common Mistakes To Avoid

In the credit lives of many consumers, a credit score and credit history are either in a position where a consumer may be in good standing or in need of improvement, but this latter category is often one in which a consumer is either in a bad credit position and in need of practices that will help them improve a low FICO score or some are simply in a position where they want to increase a score that may be good but not great. However, the way that consumers establish a positive credit rating will vary and there are also some common mistakes that individuals may be unaware of that could lead to setbacks in this credit repair process.

In an article on the WallStreetJournal.com, it stated that a consumer’s past behavior will count towards their score but their current behavior matters more, using credit is one of the best ways to rebuild bad credit, and a poor credit score or even one that may only be subpar can be more hurtful than some consumers realize. For these reasons, among many others, focusing on improving a FICO score is one aspect of an individual’s financial life that should not go unheeded even if they are in a decent financial position.

Obviously, some of the mistakes that consumers make are common but may go unnoticed as late payments and missed payments every now and again will do a substantial amount of damage to a consumer’s credit score even if it does not seem to impact their financial life in a significant manner. As an example, a late payment on a home loan, which has become common for many individuals struggling to meet their mortgage payment, can do a great deal of damage to a consumer’s credit score and, even if this does not force a consumer into foreclosure or other severe actions, it can stop consumers from qualifying for optimal interest rates in the future.

Understandably, some consumers who have walked away from their home loan, outright default on debts, or some may have even settled their debt for less than they originally owed are all individuals who will see a drop in their score as a result of their financial actions. While there are some consumers who have seen economic hardships suddenly arise due to factors like health problems or unemployment, damaging a credit score will obviously take time to repair and, during this period where a score is low, interest rates on forms of financing, like a car loan as an example, can be quite costly.

For this reason, consumers are, initially, prompted to either take a step back and review their personal financial life so that proper budgetary habits and spending plans can be made or consulting a nonprofit credit counseling is another option that consumers may use to stop a downhill slide of their credit score. Consumers will obviously be in a better position if they can show that they are able to properly use credit and implement repayment plans that will reflect well on their credit score, but consumers must either build these habits early or address major issues, again like unemployment, before trouble arises. It goes without saying, a FICO score can be hurt in a number of ways but delaying the credit repair process, ignoring financial troubles, or simply being content with a decent credit score are all factors that could lead to further financial stress in the life of a consumer in the future.