Law

Rebuilding Credit Is Easier Than You Think

The average credit score in the United States in 2019 was 703, which is considered a “good” score among most creditors.

However, you may find yourself amidst the 12% of Americans with a “poor” score below 550, especially if you have recently worked with a bankruptcy Maryland lawyer. Since your credit history has such a significant impact on your purchasing power, it may be imperative for you to do whatever you can to boost your rating. Fortunately, it might not be as difficult as it seems.

Factors That Influence Your FICO Score

Your creditworthiness is based on five types of reported financial data. Credit bureaus use the data to calculate your FICO score, and creditors rely on their analysis to estimate your financial reliability. The five influencing factors are:

  • The number of on-time or late payments
  • The age of your oldest credit accounts
  • The percentage of your total credit used
  • Recent requests for your credit history
  • The variety of your credit account types

Reported items could affect your history for a few months or a few years. If you see old or inaccurate entries on your report, contact the credit bureau to file a dispute.

Strategies That Rebuild Your Credit

Repairing a poor credit score isn’t impossible. Studies have shown that a selection of Chapter 7 bankruptcy filers saw an average score increase of 15%, inside the “fair” range, within eight months of discharge. Making on-time payments and spending less than one-third of your available credit generally have the most substantial effect on your score. Still, those efforts can be challenging, sometimes impossible. Fortunately, some other strategies and products could contribute to improvement, such as finding a co-signer, becoming an authorized user and applying for credit-building loans or secured credit cards.

Don’t be discouraged by the fact that critical financial elements such as judgments, defaults and poor payment habits can influence your credit history for as long as a decade. You can start taking small steps now, and you might be surprised by how quickly they can impact your score.

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