Today was National Get Smart About Credit Day for 2023. A day to start thinking of getting a clearer and higher credit score. Let’s face it, credit has a grip on the way we live. Being able to get a car, getting a mortgage on our house, or a rainy day hits and that heater goes out or needing repairs on the car. Thinking of paying cash for everything can put modern people not being able to live the way we need to live on a normal daily basis. Having credit available depends a lot upon how our credit score is. Every time of year, including the upcoming holiday season is a great time to start thinking of credit scores. Here are some tips and pointers on getting this better, quicker.

Bringing Credit Scores Back From the Dead Zone
Haunted by low credit scores at one or all three reporting bureaus? Credit scores are an important part of anyone’s the overall financial picture, and having bad credit can cost both money and also missed opportunities, from paying higher interest rates and insurance premiums, to potentially not qualifying for financing when it is needed.

Credit score have become as scary as a vampire by sabotaging financial goals at every turn of a whim. But worries can lessen by knowing that It doesn’t take magic tricks to bring credit scores out of the dead zone. It does take some time and effort and goals, but they pay off in the end.

Things That Can Hurt Credit Scores
There are a variety of factors that can drag credit scores into a frightening and scary area. Here are the primary reasons:

  • Having late payments. This is the most important factor in having credit extended to anyone, when calculating the credit score, so having late payments can do significant damage. Having a missed a bill or credit card payment can seem like an innocent mistake, but even just one late payment can stay on credit reports for up to seven years. You are able to see on each credit report how long a missed payment will stay by checking reports regularly. The ability to pay on time is a great factor in having low scores and being denied credit, so the more missed payments, the longer it takes for credit scores to recover.
  • Carrying  high balances. Just because the credit limit on credit cards doesn’t mean that they should be maxed to the limits. Using just 30% of available credit starts to cause scores to drop, because it is a sign to creditors that there is the possibility of reliance on non-cash funds in order to cover expenses.
  • Lack of credit history or accounts are all too new. It takes credit to build credit. If the established credit history is too new and doesn’t cover a long history, creditors don’t have much to go on when evaluating creditworthiness, which drives scores down.
  • Applying for new credit too often. It may be temptation to hop on that new offer of a store credit card offers to come up with an extra account, or those promised perks and discounts! But let it be known: opening new credit cards or charge accounts bring hard inquiries with them, so having too many hard inquiries within a short period of time is a signal that there is higher risk. Generally, Hard inquiries stay on credit files for two years, so don’t fall into this trap.
  • Lack of proper credit mix. It may seem contrary to intuition or to common-sense, but a lack of credit variety will also lead to lower scores. For example, if the only credit available is revolving credit, credit cards, etc.–and don’t have some form of installment loans like as an auto loan, a mortgage, or student loans, it’s likely to lower credit scores.

How FICO Score Is Calculated

How FICO Score Is Calculated - cb-svg-piechart.svg

Building Back The Credit Score
Anybody can repair their credit scores over time. The keyword is time, and not to try to hurry it. This is because it won’t happen overnight, but by following some guidelines and steps, scores reserve room for improvement. Here are some tips and pointers to improve scores:

  1. Pay on time, every time. Consistent and on-time payments have the biggest positive impact on credit score, so paying bills when they’re due should be priority number one. Setting up automatic payments has its benefits so that being late paying a bill becomes obsolete.
  2. Pay off any overdue amounts. Next, work to get all accounts in good standing, by paying off any past due amounts as soon as possible is paramount in order to prevent it from further damaging scores.
  3. Reducing debt. If credit card utilization (i.e., the amount of credit used vs. how much borrowed) exceeds 30%, pay down that debt as much as possible gets scores higher. Once at the 30% mark, boosts start to happen to credit scores, and the more that credit utilization ratio goes down, the more scores go up.
  4. Reviewing credit reports. Everyone is entitled to receive one free credit report each year (every week until the end of this year, due to COVID-19), and review it to ensure accuracy so that there are no items that could be tarnishing credit. If there are errors, dispute them. Signing up for a credit monitoring service in order to keep an eye on changes to credit reports and score throughout the year can be a helpful tool.
  5. Don’t apply for new credit. Until you get scores back to a healthier position, it is best not to take on new debt, for several reasons:
    • It will mean another hard inquiry, which will knock your credit score down a bit.
    • It may increase debt obligation, which can make it harder to pay off all existing debt and sabotage your the effort to boosting credit scores.
    • It increases debt-to-income ratio (DTI). Improving credit to apply for a mortgage, DTI should be at about 43% or less.
    • Running risk of not being able to qualify and being denied credit, and still a hard inquiry on credit reports. Thereby making the need to settle for less an account with less desirable terms and interest, which ends up costing in the long run.
  6. Making sure not to close accounts if debt is paid off. If credit card utilization (i.e., the amount of credit used vs. how much borrowed) exceeds 30%, pay down that debt as much as possible gets scores higher. Once at the 30% mark, boosts start to happen to credit scores, and the more that credit utilization ratio goes down, the more scores go up.

What If Credit Score Is Nonexistent
A phantom credit score means that there is no score. This is perfectly normal while just getting started with establishing credit. But it takes credit to build credit. and as it is done, applying for a secured credit card (one of which a security deposit is put into savings as collateral) can be a great tool. Although it is sometimes very hard to have someone trust, becoming an authorized user on someone else’s account, or have someone co-sign on a loan can also be really great. Once credit has been extended, follow all the above tips and diligently build the credit core, and keep it high.
Easing Back In
At what point is a credit score high enough that the time happens that credit can start being used again? The answer depends on established goals and what the needs credit are. The best place to start is by seeing what range credit is at
FICO Score Range:

FICO Score Range
Score Range Point Score
Exceptional 800 – 850 Points
Very Good 740 – 799 Points
Good 670 – 739 Points
Fair 580 – 669 Points
Very Poor 300 – 579 Points

Smart Start is to Start Small
Ready to apply for credit? It is smart to start small. Don’t run out and get three new credit cards all at once! Only apply for when the need arises and only for the amount needed, avoiding the pitfall of applying for extra, not needed credit, whether that’s a credit card, personal loan, or auto loan. Handle it responsibly by keeping balances low, on revolving credit lines and making all of your payments on time, and if possible, making extra payments. Never be late, and never skip a payment!

You are on your way top creating a history of consistent, rock hard and steady payments! It takes time and patience, but it’s what will help get credit rating high in the long run and to continue building a strong credit score — and to keep it that way.


Image courtesy of Openverse

Ways To Get Higher Credit Scores

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