Fixing a bad credit score is easier than you think, and in today’s world credit is everything.  Think of credit as the life blood between you and the bank. A credit score is a number that indicates to a bank, finance company, or other lender your worthiness of borrowing money for a car, home or other lines of credit such as The 3 digit number is determined by looking at your credit history. The following chart shows the ranges of credit scores:

According to a 2015 report by Assets & Opportunity, 56% of Americans have subprime credit scores which suggests to lenders that you have damaged credit and possibly one or more delinquent accounts.  Meaning you are a higher risk to loan money to.  This is why it’s so important now a days to know your credit score, what is on your credit, how it is effecting your credit score, and how to improve your credit!

Review Your Credit Report

The first step in figuring out how to fix bad credit is by just obtaining a copy of your credit and review it at least once a year.  Once you get a copy of your credit you will be able to see your score (refer to the chart above for reference) and determine what is on your credit that is actively reporting both good and bad.

The only official site to get your credit report once a year for free is here:  The other sites that claim to be free but usually have a fee attached or they sign you up for recurred billing.

With your credit report in hand check your report for any errors that may have occurred or accounts you do not recognize.  While credit fraud is becoming more and more common these days looking for credit cards or loans that you may not have taken.  If you do spot an error or have concern on your report you should contact the company reporting and verify the information or contact the credit bureau you received the report from (Equifax, TransUnion, or Experian).  It doesn’t cost anything to contact the credit reporting agency and request it be corrected or removed. Also, you may choose to hire an outside company to review your credit for you or just simply ask your bank for assistance. You can start by learning about all things Preferred Checking Accounts.

What is Causing My Bad Credit?

Once you have reviewed your credit report and checked for errors now you can determine what is causing your low score and bad credit.  Look for any accounts that you have that are behind or delinquent which could be credit cards, cell phones, utility, medical, student loans, automobiles, etc. According to myFICO, your credit score breaks down as follows:

  • 35% Payment History
  • 30% Amounts Owed
  • 15% Length of Credit History
  • 10% New Credit
  • 10% Credit Mix

Here is a short video describing each of these factors:

Fixing Delinquent Accounts

The best score you can get is a one and the worst score is a nine for Equifax.  A one means you had a loan and you paid it back on time or are currently paying it back on time, 2 means you are late and should make arrangements to catch up, 3 means you are very late… 9 means the loan has been charged off and no further arrangements have been made to rectify the amount owed.  It’s also important to understand that late payments can’t be taken off your history but you can catch up and still finish paying it off successfully and receive a 1.

Loans that have a 8 or 9 usually can be arranged to take a settlement amount smaller than the amount reported to the credit bureau if you call and ask.  In which case it will report settlement accepted meaning you went back and cleaned that amount up.  It won’t stop reporting to the credit bureau for 7 years, but with a zero balance it will show a step in the right direction for you and won’t effect it as negatively to future lenders.

Making Payments On Time

Now that we’ve looked at fixing your delinquent accounts the last piece of the puzzle is paying back your amounts owed which has the second largest effect on your credit score.  Work out a budget of how much you are spending and how much free money you have available at the end of each month and you’ll know how much you have to justify a possible new payment.  It’s important to remember to start painting a new picture in your credit bureau by making all your payments on time from here on out.

In summary, paying your bills on time and in full consistently will help you prevent bad credit. Your credit score is based on a variety of factors and can be used to determine whether you will qualify to borrow money as well as the terms (including interest rate) of the loan.  If you have enjoyed this article let us know, and remember there are two things that effect your credit the most: Houses and Cars.  They are the largest dollar amount on your credit and give future lenders a clear picture of how you pay your bills.  Paul West Used Cars dealership helps people with bad credit get into quality low mileage vehicles and builds your credit by reporting to the credit bureau each month. Search all our bad credit used cars to help build your credit back today!

If you have any questions or need anything just let me know!

Phil Nassoiy

Vice President of Paul West Used Cars

Useful Links:

Is 650 a Good Credit Score? Your 650 Credit Score Explained

Most Americans Have Bad Credit, Study Finds

Credit Score Ranges: What Do They Mean?