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Credit Scores at an All-Time Low
Published in Credit Counseling on Jul 06, 2011
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I just read a recent report from FICO, the firm responsible for calculating and assigning you your credit score, which stated that more than 43 million Americans now have a credit score lower than 599.  For those of you that don’t keep track on where that number falls on the Good/Bad Score scale, a score of 599 is pretty bad.  Actually, it’s really bad.  As in, lenders won’t even give you the time of day bad.  And over 43 million people are stuck in this position, in need of serious debt relief and credit repair.

To put this in even greater perspective, that’s over 25% of the US population that is now essentially staring into a financial black hole.

How did it come to this?

Now look, I’m pretty sure most people know how important it is to stay current on your bills and payments to maintain the best possible score.  One thing that’s important to keep in mind is how crucial not only your older credit cards are to your score, but how your recent payment history looks as well.  If you’re history shows a, uh, history of late or missed payments, collections and maybe a judgment or two for good measure, your score will reflect that.

If your aim is to secure a significant loan, like a home or auto loan, with score of 599 or lower, you can kiss those hopes goodbye for the foreseeable future.  Most mortgage lenders will tell you that the last two years are the most significant to them when scanning someone’s credit report to determine both their credit worth and their risk factor.  If you’ve been frivolous with your cards and ignored those payment notices, you can bet your score will reflect that in as little as a month.

And much like clawing your way back to an A grade in school after you’ve slacked on assignments and are threatened with a C- for the semester, getting your score back into its Sunday finest is much harder to do than it was to fall by the wayside in the first place.  Having a record of late payments shows any potential lenders that you obviously have no business handling a loan, especially a loan from them.

Okay, so how do I fix it?

Like anything worth fixing, all it takes is patience, time, and a little elbow grease (in the form of payment plans).  If you’re faced with no loan options until you can raise you credit score to something that resembles passable, start by getting in touch with your creditors who are reporting negative information in your history. 

If your low score is simply a reflection of late or missed payments, make it your prime goal to set up a payment plan so that you know exactly when each bill is due so you don’t miss it again.  You may also consider writing a letter of goodwill to your creditors once you get back on track.  A goodwill letter basically asks your creditors to cut you some slack for your missed payments and have them wiped from your record.  Of course how often you were late will influence their decision, so if you’re looking at multiple 90+ day late payments, you might have a little trouble getting the answer you want.

For other, more serious blemishes on your report, your best bet is to verify the charges with the creditor and, if all their information is correct, work out payment plans as well to get rid of the negative account.  More serious negative accounts, like collections judgments and bankruptcies stay on your report longer and look worse than late payments, so if you’re report is riddled with these, be prepared to wait a while if you’re looking for the best deals on loans.

John LeBlanc - About the Author:

John LeBlanc has written more articles on credit repair than he'd care to count.
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