Having a credit score of 550 qualifies you as a very bad credit seeker, which means you cannot easily be approved for loans, mortgages, credit cards, and other lines of credit. In any case, it is important to note that it is quite achievable to restore the credit score and reach the average level once again after getting the 550 credit score. Here are some tips on how to improve your credit from a 550 score
Here are some tips on how to improve your credit from a 550 score:
Review Your Credit Reports That means the first thing one has to do is to obtain credit reports from Equifax, Experian, and TransUnion to find out what hurts your credit score. Search for such issues as lack of accuracy, errands, or data that has not been updated for a long time, as they lower the rating. Challenge these with the credit bureaus to have it erased. Also, check the account on collections or defaults. These need to be paid off or come up with a way to settle for a lower balance.
Pay Down Balances Credit utilization is one of the things that can pull down your credit score or improve it depending on the measure taken. This shows how close one is to his/her credit limit by ascertaining the ratio of credit currently being used to the total possible credit. It is advised to keep this below 30% according to financial gurus. Your scores are high therefore you probably have very high balances about your credit limits, or a 550 score means that it has high balances compared to credit limits. Exert an effort to reduce credit card and revolving credit utilization rates by actively working to pay down balances more aggressively. It is sensible to aim for getting below 50% first, though.
Become an Authorized User Get someone with good credit status to be your reference on credit card applications by making you an authorized user. This enables those positive records of payment to show in your score right from the day you sign up. But do make sure they have great grades themselves and small unpaid amounts on that account. Do not follow or use accounts with a questionable history of past activity.
Secured credit cards are much like secured loans in that you have to put down a security deposit to be granted credit in the form of a credit card. Since credit is already compromised, one has to start small and use secured cards to regain the credit. These have credit facilities where you pay a cash amount that will be used as a form of credit. It is advised to use the card sparingly and make all the payments on time to gain positive items on the reports. A typical secured card can be transitioned to an unsecured after six months to a year of proper credit utilization and you also get your deposit back.
Limit New Credit Applications It can be a tendency to apply for many new credits as soon as possible while first attempting to raise the overall limits and lower the credit utilization ratio. However, any activity connected with multiple inquiries and new accounts will lead to short-term deterioration of the score. Request credit gradually and wait for at least 6 months for a new account to be reported before requesting others. Predictable as pricing changes and this is what concerns when there are too many new accounts too quickly.
Reporting errors should also be corrected after they have been discovered through the various reports made. It is very possible that even one of the credit reports you received was skewed already by a single error that could be bringing down an already low score. Retrieve the latest official reports and go through all entries on the list. After correcting the errors, dispute them to the bureaus. Any information that can not be substantiated should be omitted from reports. Just correcting errors can at times push scores considerably higher in isolation.
Consider Credit Counseling If the levels of debt feel unbearable there is nonprofit credit counseling that one needs to take. They can help in bargaining for a reduction of interest rates on debts or time to pay back. This helps to safeguard accounts from further odds of default, at the same time affording you time to repay. The letter has important meaning since defaulted accounts destroy credit scores. The only thing you need to be careful about is to read all the conditions set by the agency before cooperating with it.
Negative marks to wait for reports They can contain negative information such as late payments, collection accounts, and public records such as bankruptcies and they remain on the reports for 7-10 years based on the type. However, the scores they get do not affect the final score in the same way as before and as time goes on, their influence reduces. In the case of negative items, your score will gradually rise as they become old. Meanwhile, there are no other problems that should be encountered.
Moving from 550 to 670 that places a person in the “good” credit category is not easy and it takes a lot of time to do so. While it is possible to make incremental increases of less than 100 points, if you remain diligent and adhere to credit-building strategies, it is reasonable to expect to increase your score by 100 points or more within 12-24 months. At that period, it should be most important that all payments are on time, which means not only credit accounts but all accounts. This portion of your credit score is important since payment history determines it.
One should keep a check on their score on Credit. com monthly or at the credit card companies. This enables one to make some assessments to determine some level of progress. It is exhilarating in the sense that you can watch scores slowly rise in the tens! Strive to reach the two-year mark of good behavior. Following that, you should be good to go as far as getting unsecured credit cards, personal loans as well as mortgages in the mid-600s.
The recovery period may look steep and arduous if one needs to climb back to the 550 credit rating. While getting all the pieces right at once is impossible, taking the right steps does enable the gradual progression of assembly. Avoid incurring new credit applications in the short run make payments on time and reduce balances. Understanding that with a proper level of determination and diligently good financial habits, the applicant is eligible for a mid-range score for approval likelihood. So, do not give up on getting an average of 550-700
Call now for expert credit repair services: (888) 803-7889
Read More:
How to get a 750-credit score in 4 months?
How to remove collections from a credit report?
Do goodwill credit letters work?
How to remove negative items from a credit report?
Has anyone gotten an 850-credit score?
