Have you been denied for a loan recently? Unless you have, you may not have any idea of what is going on with your credit. Sometimes, it is the shock of being denied for a loan that makes us really wake up and take note of what’s going on. Here are some factors that may indicate that you need credit repair.
This post is sponsored by CreditRepair.com. All opinions are mine alone and are honestly conveyed.
A good starting place to start to find out if you need credit repair is to establish what “good” credit actually is. Once you know what good credit is and what factors go into calculating your credit score, you can determine whether or not you need to work to repair and raise your score.
Related article: Credit Score Deep Dive—5 Factors that Affect Your Credit Score
What is a good credit score?
Credit scores range from 300-850. According to Experian, a score of 670 or above is considered to be good credit, with a score of 800 or above being considered excellent credit. Equifax considers a score of 700 or above to be a good credit score, noting that a score of 670 or higher is considered to be a “low risk” borrower. Transunion classifies “A” and “B” credit as a score of 720 or higher.
It’s obvious that each of the bureaus has slightly different score cut-offs to define “good” credit—and so does each creditor. While things may vary a bit, the general idea is that the higher the score you have, the better the programs and interest rates you will qualify for.
These factors will let you know if you need credit repair
While this may not be a full list of everything that may show up on your credit report and adversely affect your score, it is a very good starting point. Here are some of the primary reasons that your credit may be in need of repair:
Do you make your payments late each month? One key thing to keep in mind regarding payment history is that the creditors won’t actually report late payments unless they are at least 30 days late. So, just paying beyond the due date doesn’t actually hurt your credit payment history. If you are paying a few days late, you will incur late fees every month—which adversely affect your budget—but aren’t hurting your credit. If you are making your payments a month or two behind, though, it is definitely negatively impacting your credit score.
**One thing to keep in mind with late payments is that you may not be able to get caught up and be considered as paying on time, until you have all late fees paid.
Maxed out credit cards
Are all of your credit cards charged up to the maximum limit? Or even balances above the limit due to penalties or interest? Any time a credit card has a balance to the maximum limit ratio above 50 percent, it will adversely affect your credit score. For example, if you have a credit card with a limit of $5000, if you owe more than $2500 charged on it, your score is probably being affected in a negative way.
If you have accounts that you have defaulted on and are showing up as collection accounts, your score is most likely being impacted negatively. It really doesn’t take much to end up in a situation where you may have an account in default—perhaps you moved and the bill is not getting forwarded, maybe you lost your job or were involved in an accident and were unable to keep up with the payments—but for whatever reason, you got behind on payments to the point that the creditor turned the account over to a collection agency.
You can try to settle collection debts on your own by reaching out to the creditor or utilize the services of a credit repair company to get those accounts settled and cleared off of your credit report. Often, you may be able to settle for less than the amount that you actually owe!
Have you been denied on a loan?
If you recently applied for a new credit card, auto loan, or personal loan—and have been denied—you probably need credit repair. Many times, we don’t even know what is going on with our credit until a problem arises. Whenever you are denied for credit, you have the ability to obtain a free credit report of what the creditor used when determining whether to lend to you or not. Regardless of the reason that you were denied, you should definitely check into what is showing on your credit report that may have been detrimental.
Didn’t qualify for the lowest rate possible
Sometimes you are not denied a loan to find out that you need credit repair, but perhaps, you didn’t qualify for the best program possible. Simply qualifying for a new credit card or a loan of some sort doesn’t mean that you got the best program available. In order to get the lowest rate available—which gives you the lowest payment and saves you the most money—you must have “excellent” credit. So perhaps you were extended credit, but the credit card or loan had a higher rate than what you could have received if you had a higher score.
Sometimes credit repair isn’t about repairing bad credit, but improving good credit to reach excellent status.
Old accounts still showing on your credit report
Until you are denied for a loan or find out that you don’t qualify for the best program and the lowest rate possible, you may not have seen your credit report. Sometimes the problem is that old items are still showing up on your credit report. If you have old accounts still reporting, collection accounts that have been settled, or inaccurate information reporting, you need to work to get those items cleared and updated. f