If you have a 500 credit score, your financial life is probably somewhat difficult. I personally know exactly what that’s like. You can’t buy a cell phone or satelite dish, let alone a nice vehicle or home. It’s embarrassing and it’s worth doing whatever it takes to improve the situation. I personally was able to dig out of the hole I created and you can too.
The first thing that you have to do if you find yourself in this situation is educating yourself on the process of recovery. This means that you will have to learn about the factors that have caused you to have bad credit.
Likely Causes of Bad Credit
There are a lot of things that are used to calculate a credit score, but a few of those things are the most likely culprits. I’ll focus on the most likely causes and you can check your own credit report to evaluate how they line up with your credit profile.
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High revolving credit balances are one of the most likely causes of your low score. As soon as you have balances over 35% of your available credit, it will start to affect you negatively. The higher you allow your balances to get, the more it will affect your credit score. Paying those balances down will have a huge positive impact on your credit. For those of you who are unfamiliar with the terminology, revolving credit accounts are basically credit cards.
Late payments are also a killer and are high on the list of common issues causing bad credit. As soon as you have made a few payments that are 60+ days late, it’s really going to start affecting you. While you usually can’t undo that past, you can make up a lot of ground by making on-time payments. If you will commit now to never make another late payment, you’ll find that your credit score can start to improve within a few months.
My Personal Credit Turn-around
I personally went from having a credit score in the 500 range to having one in the 800 range. However, this doesn’t happen overnight. I didn’t make a late payment for years and years – I’d say I haven’t made a late payment in six or seven years. I now no longer have any late payments on my credit report. I also have balances that are very low on all of my credit card accounts.
In the past, I simply wasn’t responsible financially and I had to make a change. That change wasn’t easy to make. It was worth it. I don’t have to worry anymore about applying for any kind of loan.
If you are struggling to re-establish your credit, secured credit cards can really help. I personally used them before I could qualify for regular cards.