Improving a bad credit score and building better credit is something that many consumers have embarked on over the past months after suffering financial setbacks or simply realizing that their current financial habits will potentially land them in a bad financial position if they continue on their current course. However, not only are consumers finding that making the right decisions in terms of their credit life, budgeting habits, and repayment methods will be vital before they see any improvement in their FICO score, but also, avoiding common mistakes will also be necessary if a consumer wants to improve their credit score and avoid setbacks.
It’s common knowledge that making late payments, facing foreclosure or filing bankruptcy, and entering into a debt settlement program are ways that a consumer will do damage to their credit score, and these are some of the reasons that consumers may have seen their credit score fall, as well as, simply spending beyond their means to repay and, again, missing payments or defaults on debt. However, consumers also need to understand that factors which influence their FICO score outside of these common mistakes will play into how easily a consumer is able to repair bad credit or simply establish a better credit score.
Maintaining a positive credit score and repairing bad credit is vital according to some advisers as an article on CreditCards.com states that, “FICO scores — and the access to credit they provide — are a valuable asset to consumers and supply a safety net when incomes are stretched. It’s an asset that needs to be protected…even if job loss or catastrophic illness makes bill paying problematic.” Obviously, getting in a better financial position is a priority for many, but when it comes to the financial ability of consumers to easily repair bad credit or build a more positive credit score and history this can be difficult, but there are practices that consumers can avoid that will help them steer clear of any steps back that they may take on the credit repair process.
One of the major problems that consumers have is in the area of their credit utilization ratio. When a consumer has access to a high amount of credit, but has a low amount of debt, this is viewed more favorably by many lenders and can be a positive influence on a FICO score, so keeping debt levels low will not only be beneficial in helping consumers avoid financial distress, but it will also be helpful when it comes to improving a low credit score. However, consumers need to understand that getting out of debt should be their first priority as bad credit repair will be more difficult or even impossible in some cases if debts remain in the life of the consumer.
While there are credit counseling agencies that may help consumers find debt relief options if their situation is severe or simply implement a household budget so that consumers can get out of debt and begin improving their credit score, addressing bad credit issues quickly and through disciplined financial methods will be necessary if consumers wish to not only improve their credit score but avoid setbacks in their financial life down the road.