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Credit score affects your ability to borrow money from a bank. Even a small business loan can be difficult to take with a poor credit score.

Talking about credit score, it means the level of trust of potential lenders to you. You can easily and free check your credit score. Let’s find out how to get to know your credit score and what to do if you have a bad credit score.

How to Check My Credit Score?

Bad credit score actually describes a record of your past failures. In other words, it shows that you could not keep up with payments on credit agreements that caused inability to get a new loan from a bank. Usually, it is apples to people who have not paid their credits. The credit score also takes into account other public records, such as bankruptcy, taxes, and other legal judgments about a person.

You can get to know your credit score from companies called credit reporting agencies or credit bureaus, such as TransUnion, Equifax, and Experian. They collect all your credit history to compile a complete report. If you try to borrow money from a bank, lenders will request your credit report from them.

Know Your Status

You can find out your FICO score that is calculated based on your credit history. FICO is the Fair Isaac Corporation that developed special algorithms to count the score.

Due to FICO variations, credit score range is from 300 to 850 where 650 is almost a bad credit score. Late payments and negative records can affect your FICO score.

If you have poor credit score, most lenders will deny your application on a new credit. Besides, even if someone will give you a loan, most likely you would get bigger interest rates than other people with better credit score.

How to Fix Poor Credit Score?

For those of you who have a poor credit rating, there are several things that you can do to fix your score.

1. The very first and essential step is to check your credit score using one of the credit bureaus. You can also use a free online tools that allows you to see your credit score and credit reports.

2. Check for any mistakes and typos in your reports. Even a slight mistake can affect your credit score, such as wrong address. Make sure you checked all the details and everything is correct in your credit report. You have to report any incorrect information the second you found it.

3. You can dispute negative marks online. You should not send a letter to a credit bureau, like it was a while ago. Some disputes will take longer than usual, so stay patient.

4. You can also increase your credit card limits. Do that by paying all your balances and then ask your bank to increase your credit limit. It will positively affect your credit ratio, without a doubt.

In simple words, you have to keep your credit utilization low. For instance, if you have $2000 credit limit, and you used $1000 of that, it means you have 50% of utilization limit. If you pay part of this credit and for future use less of credit, it will positively affect your credit score.

5. Pay your bills on time, because even one late payment can influence your credit score. You should know that if you are late for your mortgage or credit card payment, the provider will definitely let credit bureaus know about that.

You can always check what accounts appear in your credit reports, and try your best to pay on time at least these accounts. In future, it is better to pay on time always.

6. You can increase your credit card utilization ratio by opening another account or credit card. As long as you don’t carry a balance on that card, your available credit increases by that card’s limit immediately. Look for cards that don’t have annual fees, however, this type of creads could offer bigger interest rates.

7. You can also pay a credit repair company that will remove negative information from your report, and eventually, improve your credit score. However, the Consumer Data Industry Association prohibits firms that report credit data from removing negative information in exchange for payment, because they want to maintain the accuracy and integrity of credit reports.

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