If your life sounds like this, it’s time to begin some credit-repairing treatments.
We all know that neglecting your physical health can lead to big problems. But not staying on top of your credit health can also cause big issues in your life that can hold you back.
You may not get approved for a car loan, or might only be able to get loan terms with a high-interest rate, for example. Maybe you get denied credit cards or don’t have good enough credit to get approved for the credit card you want. You could even get passed over by an employer or denied an apartment based on your credit history.
Just like with your physical health, your credit health needs a check-up every so often, especially when your credit is keeping you from things you need to live a better life.
Ready to get at the root of your credit health issues? Here are six symptoms that signal it’s time for a credit health check-up and immediate treatment.
1. Your credit score is fair or poor
With a good (670 to 739) or excellent (800 or above) FICO credit score, getting approved for loans and credit cards isn’t usually an issue unless other credit factors cause the denial. If your credit score is only fair (580 to 669) or poor (below 580), it’s definitely time to examine your credit to determine the cause and take steps to improve your score.
2. You’re denied credit
Have you gotten denied for credit cards or loans lately? Even one denial raises a red flag that it’s probably time to examine and improve your credit. But consistent denials of your credit card or loan application are a sign that it’s time to get to the bottom of what’s causing creditors to doubt your creditworthiness.
Thanks to the Fair Credit Reporting Act (FCRA), it’s easy to diagnose the credit killer that’s keeping you from obtaining the credit you need. Just contact the creditor who denied your application within 60 days and ask.
The creditor must tell you the specific reason for the rejection, according to the Consumer Financial Protection Bureau (CFPB). For example, your credit score was too low, your income was too low or you haven’t held your job long enough.
Find out: 5 Steps to Take When Your Denied Credit
3. You’re hounded by debt collectors
When bill collectors are calling, you know that if your credit isn’t already in trouble, it’s well on its way to being damaged by accounts with a late payment history. Since payment history makes up around 35 percent of your total credit score, negative payment history can drop your credit score.
The good news is that those late-payment accounts automatically drop from your credit report after seven years. So, if you start consistently making payments on time, your good payment history will gain credit score points as those old accounts disappear.
4. You’re not monitoring your credit report
You should review your credit report at least once a year, according to the CFPB. Look for any errors that could be causing your credit score to dip, and if you spot inaccuracies, contact the creditor and the reporting credit bureau to dispute or correct them. Also, look for negative payment history or collection accounts so you can get an idea of when they’ll drop off.
Normally, you can get one free copy of your credit report a year from AnnualCreditReport.com. Due to the pandemic, however, you can obtain one free copy of your credit report a week through December 31, 2023, from all three major credit bureaus (Equifax, TransUnion and Experian).
5. You missed out due to a background check
Did an employer not hire you after getting your permission to run a background and credit check? Maybe a landlord changed their mind about renting to you after you okayed a background check and they got the results.
If employers and landlords love you until they see your credit history, your credit health can use a check-up. Review your credit report to learn what’s holding you back. Also, ask the employer, which is legally required to provide the reasons they rejected you based on the credit check.
Then take steps such as meeting with a credit counselor at a nonprofit credit counseling agency to create a plan to repair your credit, pay off debt and get back on track.
6. You’re carrying too much debt
Even if you have a good credit score and regularly get approved for loans and credit cards, carrying too much revolving debt can lower your credit score. Your credit utilization rate – the ratio of revolving debt to your available credit – accounts for 30 percent of your total credit score.
Ideally, your credit utilization ratio should be no greater than 30 percent of your total available credit. If yours is above 30 percent, focus on paying down your credit cards and do your best to keep your credit utilization under 30 percent.
Get professional help to clean up errors in your credit report.
Published by Debt.com, LLC