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Where Is My Good Credit Score?

Most of us tend to ignore our credit score until we are alerted to a problem or get ready to apply for a loan. If you are like most Americans your score probably isn't as good as you hoped, but that doesn't mean you can't get a good score. What's Dragging It Down? The credit 

Most of us tend to ignore our credit score until we are alerted to a problem or get ready to apply for a loan. If you are like most Americans your score probably isn't as good as you hoped, but that doesn't mean you can't get a good score.

What's Dragging It Down?

The credit bureaus use a scoring system that takes into account several factors when determining your score. How much total debt do you have? Have you ever been delinquent or in collections over a debt? How long is your credit history?

The biggest culprit to drag down your score is your debt balances. If you have one or more accounts with a debt balance more than 40% of your total available line of credit, your score will take a hit. That is why carrying high balances aren't just simply too much debt, but if it significantly reduces your available credit it will cut your score.

Another thing that quickly damages your credit score is delinquent accounts or missed payments. If you have ever been more than 30 days late, chances are you have a red mark for that month on your report. Even missing only a single payment by 30 within the last year or two can significantly affect your score. If you are repeatedly late or are currently in collections, your score will also be chipping away the longer you stay at this status.

While you may not have high debt balances or missed payments, having a short or nonexistent credit history is also likely to affect your score. Since you haven't been borrowing long, lenders are often hesitant to approve a loan because they can't accurately assess your borrowing risk. Therefore, if you haven't been in the credit game long it is important to take the time (a year or two) to establish your credit history before applying for a big loan like a mortgage.

How Can I Fix It?

People often think repairing their credit is impossible, or at the very least extremely difficult. Yes, credit repair does take time and effort, but it is certainly within reach. Start by evaluating your account standings, if you have any delinquent accounts or are in collections you'll want to get in good standing as quickly as possible. Contact your lender and find out what is required to return your account to a satisfactory standing and do exactly that. Removing these red marks is extremely important for the health of your credit score.

Next, look at your debt balances and develop a plan to reduce your debt balance to less than 30% of the credit line on that card or loan. If you have several credit cards with high balances, start with the smaller balance card and pay as much as you can each month towards that balance. Once you have reduced or paid off that card, start with the next card and repeat the program until you have lowered them all. Of course, this takes diligence and planning, but it worth it in the end when your scores skyrocket.

If you are having trouble with your credit or need help negotiating with creditors, a New Albany bankruptcy lawyer can help you develop a plan to get you on the path to financial freedom and a top credit score.

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