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Five reasons of low credit score and simple ways to improve it

22nd March 2018 Print
Credit Score

Is it good to have your credit score under 600? Of course, not! The rates offered by banks will stay huge and you are not sure whether your loan application will become approved or not. But if you’ve requested your borrowing report and found out that your score stays surprisingly low, that doesn’t mean that you are an irresponsible borrower or that you will never receive a loan. This rate is calculated by special agencies using a variety of factors that are far beyond your financial responsibility.

5 Reasons Your Credit Score is Extremely Low:

1. The way you pay off your balances. Financial discipline matter much when you apply for further loans. A lot of clients with low score tell that after only a year of using one of the Best Secured Credit Cards for Bad Credit of 2018 paying all the bills in time they have improved their score on 75-125 points;

2. The number of cards you apply for. It is normal that clients apply for one or two credit cards to meet their daily expenditures. But it looks very suspicious when the person applies for numerous cards. Banks think that this person is agile for borrowing resources, so that his financial situation is unstable;

3. Credit card utilization: If with this card one has a borrowing limit of $3000, it doesn’t mean that this amount should be fully utilized. Forbes reveals that people who utilize their credit card limit up to 5% have higher average borrowing score than those utilizing it at even 30%. It is much better to use 4-5 credit cards utilizing them on up to 10% than use one card with all the capacity (anyway, clients look riskier to banks when they use as much borrowing resources as they can);

4. Presence of collecting items or defaults: At least one bankruptcy case can bury your desires for low-interest loans for years. But it is not the end of the game and it is not the reason to cut your current bills in expense of collectors payments (as you might make your situation even worse);

5. Mistakes in your FICO report: Mistakes always happen and sometimes it is more than necessary to check your credit report two days before attending your bank. If you see the mistake, you can always request for its correction but you will never prove that to a bank.

Online credit score

The Most Common Way to Improve Your Borrowing Score

In case of a low score, there are no quick solutions. You should accept that you will borrow at high rates and that conditions of a loan agreement will not stay very pleasant. But, if you enforce yourself to pay your balances on time and employ secured lending solutions, you have really high chances of your score skyrocketing at the end of the year. Secured credit card will cost you nothing except a deposit as a collateral.

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