You’re certainly not the first adult to ruin your credit. For some of you, this has happened, not once but twice. In fact, 68% of Americans destroy their credit by the age of 30. The good thing is, it can be fixed. The bad thing is, the longer it takes to fix it, the more it will continue to have a negative impact on your life. While many of us received our first credit card as a teenager, a great percentage of us have never received the proper education and consulting necessary to go with it. Because of this, we have been more prone to ruin our credit, way before we understand the smart way to utilize it.
So, your credit is bad, now what?
The first thing you should do is find out how bad is Bad.
When calculating your credit score, a number of factors weigh-in, to determine your creditworthiness. The two most popular scoring companies for rating credit scores in the United States are FICO and VantageScore. While both companies may utilize different approaches when it comes to calculating credit scores, they meet in the middle on those factors that matter the most. Such factors include:
Your Payment History
The sum of all charges you have made via your account in general, including debit, credit and savings accounts.
Credit Utilization
The amount of revolving credit you’re currently using divided by the total amount of revolving credit you have available. In other words, it’s how much you currently owe divided by your credit limit.
Credit Mix
The types of accounts that make up a consumer’s credit report. The credit mix determines 10% of a consumer’s FICO score.
Credit Inquiries
A soft credit inquiry refers to all credit inquiries where your credit is not being reviewed by a potential lender. A hard inquiry occurs when a financial institution, such as a lender or credit card issuer, checks your credit when making a lending decision. They commonly take place when you apply for a mortgage, loan or credit card, and you typically have to authorize them.
Total Debt and Balances
The sum of all short- and long-term debt. Net debt is calculated by subtracting all cash and cash equivalents from the total of short- and long-term debt. Short-term debt adds all categories of debt due in less than 12 months.
Payment history for FICO, accounts for 35% of your score, meanwhile, credit utilization accounts for another 30%. There are other major factors to consider still. Do you have negative remarks on your credit report, such as bankruptcies, or even collections?
Negative information can stay on your credit report for over seven years from the date of the last activity and up to ten years for bankruptcies. With these factors dragging your score down, lenders will either avoid you or hit you with unrealistic interest rates, leaving you with little to no money left in your pocket each month.
As bad as all of this sounds, there’s hope. No matter what negative items are reporting on your credit account right now, you can have them removed and start rebuilding your credit within the next thirty days. That’s right—repossessions, evictions, late payments, etc. But you have to start now.
Your next move should be to consult with a professional credit repair specialist.
Make the move today that will change your life tomorrow. Speak with a professional now.
If student loan debt is causing you headaches, an income share agreement may be able to get you out of your student loan debt. Defynance has a product that will let you refinance your student loan debt using a debt-free income share agreement. It’s best to explore all available options when dealing with your credit!
This article was written by at the forefront of her Entrepreneurial professions, Leslie T Mitchell has taken the world of business by storm. Most recently, her hosting of “Woman on Assignment”, a television show that focuses on an accelerated approach towards empowerment, through teaching the modalities of establishing a solid financial infrastructure. Has reached and impacted thousands through her following and present community. We would like to present a blog that she has worked tirelessly on, as a non-profit life aid tool for the public.
