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How to Improve Your Bad Credit Score

Improving the credit score is essential for the future. The loans and credit card applications are affected by the poor credits. Borrowers are usually rejected due to their poor credit score. Lenders are not willing to take the risk to approve them for a credit card or a loan. In addition, a person with a poor credit score will have higher interest rate. Approval for an apartment or a home will also be rejected based on your poor credit score. It can even have an adverse effect on your potential employment. Organizations view your credit score to evaluate your sense of responsibility. Starting the business and purchasing assists as big as cars are going to make things more difficult. So, how do we improve the poor credit score?

Credit Card Balances

This is also known as credit utilization. The balance of your credit card can have an impact on the credit score. A high credit balance does not bode well for your credit score. It shows that you are using the credit excessively.

Alternatively, a low credit balance will have a positive impact on your credit score. You are only using the as much credit as you need. The lender will know that you are responsible with the management of your finances. The ideal credit balance is zero, which rarely happens. This would mean that you are paying off the credit balance the day of each purchase. The reasonable amount of credit balance is 20%.

Remember to avoid keeping a high credit score, because it restricts your ability to use the credit card. In addition, the low credit balance means a better credit utilization. Ultimately, this would mean a positive credit score.


It is quite obvious that old debit is not recommended for your credit score. Paying off your debts will allow you to improve the credit score. The first step is to stop using the credit cards until you have cleared the debt. To start working on your debt, it is imperative for you to list down all the credit cards you owe and the debt that has accumulated in each of the accounts. After analyzing the amount of debt that has accumulated, you need to create a plan to get rid of all the debt.

You can use a debt consolidation loan to pay off all the remaining debts. This is the most commonly used tool to pay off debt. This loan is used to eradicate all the remaining unsecured debts. Since these loans have lower interest rates, it can be easier to clear them off. If you pay them diligently, your credit score could actually improve.

Paying Bills

If you forget to pay the bill of your phone and every time it keeps on piling up, this could be endangering your credit score. Paying bills on time will help you avoid putting the credit score at risk and consequently improve it. If you forget to notify the credit card company about moving, they may continue sending the bills to an old address. The unpaid bills will continue to mount up, until you are allowed to pay them off.

Risk Management

Overall, it all comes down to the risk. A lender views how risky it will be to sanction you a loan. The credit score of your risk. If you have no credit history, that is just as dangerous. The lender will have no idea how you manage the credit. Another tip, avoid maxing out your credit cards. This might be the worst thing you do. It can ruin your credit score and increase risk significantly. Moreover, you should reduce the number of open credit accounts. The unpaid debt and the remaining credit along with new accounts tend to increase unreliability.

To effectively manage the risk factor, you could keep checking your credit report to identify any discrepancy. At times, there are inaccurate or missing information which can decrease the credit score. On the other hand, you can also resolve factors which are decreasing the credit score. Paying the bills on time, clearing debt, diverse credit card mix etc. are all aspects which can help the borrower improve their credit score.


To maintain the timely payment of bills and credit bill, you can make a schedule. Set up payment reminders so that you don’t forget to pay the bills or miss out on the payment. Several companies offer their clientele payment reminders. Alternatively, if you don’t want to deal with all this hassle, you can use the automatic payment option. Credit cards and loan payments will be automatically debited from your bank account.

How Long?

By following all these tips, you can improve the utilization ratio, clear up your debt, reduce any risk, etc. The main goal is to improve the credit history, because it is ultimately the make or break factor. The lenders will go through your credit history to determine the risk as well. In case you haven’t been classified with a delinquency or collections, the poor credit score will improve and the risk will decrease. However, with delinquencies, bankruptcy or collections, you may have to wait longer. Delinquencies are a part of the credit history for seven years. Bankruptcy will remain a part for 10 years. Collections only last for two years. Just remember, manage your finances responsibly and you will improve the credit score. Avoid using the credit unnecessarily, and open accounts only if you have to.

Thomas Moore the a Expert Financial Author with Cash King Thomas Moore is a proud American with a Bachelors Degree in Business Administration from the University of San Diego. He has been in the financial industry for many years holding numerous licenses in multiple states. He currently helps operate cashkingco.com and is our resident expert on all things finance and a great writer. Thomas is also an avid outdoor enthusiast that loves fly fishing streams in the Western United States. LinkedIn Profile