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Let's suppose there are three bad items in your credit report. One of them was for an unpaid medical bill while another was for an unpaid lawyer's bill. Let’s say the third was for a judgment in the amount of $2,500 that you eventually paid. You can look in your credit report and learn when those bad items will be dropped off. If they will fall off within the next several months, you should see some kind of an uptick in your credit score. However, if that $2,500 judgment thing won’t fall off for another three or four years, it will continue to affect your credit score until then.
Why your credit score is so important
Your credit score is important because it's the first thing that any potential lender will look at before either granting or not granting you credit. It also has a big effect on how much interest you'll pay for a mortgage, an auto loan or even your auto insurance premium. For example good score of 700 or better will get you a much better interest rate than one that's less than 600. And if your score is less than 500, you’ll pay a very high interest rate if you can get any credit at all.
Have you seen your credit report?
If you're having a problem getting credit, you definitely need to get your credit report. There are three credit-reporting bureaus – TransUnion, Experian and Equifax. You can get your reports free from each of these companies once a year or all together at www.annualcreditreport.com. The important thing is to get your credit reports and review them carefully to see what's causing you your problem. You might find that there is an error in your report that is causing the poor credit score. If this is the case, you could dispute the charge, get it removed from your credit report and see a fast improvement in your credit score.
If you can’t get any credit
The sad fact is that if there are items in your credit report that's depressing your credit score, there's not much you can do short term. As noted above, it will just take time for them to fall off your report. In the meantime, you might get a secured credit card as a way to start rebuilding your credit. If you're not familiar with secured credit cards this is where you deposit money to "secure" it. Capital One, Discover and Wells Fargo all offer good secured cards. You can use one of these cards any place that accepts Visa or MasterCard. You charge against the card until you’ve exhausted your deposit. At that point, you could add more to the account or just shred the card.
How this helps your credit
A secured credit card can help your credit because how you use it will be reported to the three credit bureaus. If you use it sensibly, this will eventually help your credit score. Also, if you use it responsibly for around a year, the company that issued your card may offer you an unsecured card. Use it responsibly, and this should have a positive effect on your credit score.