Millions of Americans struggle with bad credit scores – and it seems like there’s nothing they can do. Unforeseen circumstances like a medical emergency or the loss of a job can lead to huge financial hardships.
From credit collection accounts to foreclosures and short sales, a consumer’s credit score can be lowered drastically. This will affect the ability to apply for a loan, take out a mortgage, or even get a new job.
According to a poll conducted by the Society for Human Resource Management, 47 percent of employers use credit screening for certain jobs that include handling finances and confidential consumer data.
If you’ve recently been affected by credit damage, there are three important steps to take to ensure your credit score doesn’t get into any more trouble.
1.Verify information. Each of the three credit bureaus is required to send a free copy of your credit score each year, if requested. Equifax, Experian and TransUnion all generate their own FICO scores based on data acquired. It’s crucial to check each one to make sure the information is accurate – a credit union can report false or exaggerated information that can drastically drop a credit score. If any information seems off, then a dispute should be placed immediately to take the adverse accounts off.
2.Pay Off Loans. Focus on paying off credit card loans. It’s the easiest to pay off, and it can make a huge dent in a credit score, especially one that is already bad. “Elite” credit scores are for people with a 760 FICO score or above; their debts are usually less than 7 percent of their available credit. In order to prove that a consumer is financially responsible, even after a big credit killer, they must focus on paying off those credit cards and lower the spent percentage of their available credit.
3.Leave a Note. Huge credit killer such as a short sale or foreclosure will bring down a credit score down about 200 points. This is a huge red flag when companies look at your credit score. The three credit bureaus enable you to leave a brief statement through their website, and although these notes are not calculated into your credit score, they can act as an explanation to potential employers. For example, a person who used to have a perfect credit may have experienced a recent job lost, leading their bills to be sent to collection. Their credit score will be lowered anywhere between 80 to 150 points, but they can explain their situation for employers to see.