You might be wondering why you always get denied lines of credit or why you continuously get high-interest rates. Have you been turned down from a great job opportunity or from renting a house or apartment, and do you also get high insurance premiums? A bad credit score could be the culprit.

You are not alone because a lot of people are considered to have bad credit based derogatory items that they include on their credit report that are either false, don’t belong to them or are just inaccurate listings. Fortunately, the law provides a way for people labeled as having “bad credit” to dispute the credibility of their credit reports.

Bad Credit or No Credit

Credit scores range between 300-850, and if yours falls in the 300-640 range, this is considered to be a bad credit score, and the only thing this can get you is a secured loan which requires you to pledge an asset, such as your home, as collateral for the loan. Even though this type of loan has a lower interest rate because the bank has less risk but, if you default on the debt the lender will be pounding at your door to collect the collateral you
put up – you don’t want that. If you are worried that your credit history or lack thereof, you may want to start thinking about credit restoration, why?

Well, for starters, bad credit can have a negative effect on your overall life, not just your finances. Not only will it be very hard to get approved for any type of credit account but even with a 640-680 credit score, you may be denied access to loans, and if you do get approved you might end up getting high-interest rates. If you don’t want to worry about things like being denied a loan, high-interest rates, applying for a mortgage, credit cards, or
a car loan, you need a credit score of above 680, generally above 750 to enjoy the perks that can result from having excellent ratings.

Even though credit restoration won’t happen overnight, it is possible, but it will take time including ensuring that you make regular payments to your accounts. Remember, your credit scores are based on the information reported by various financial institutions that collect and store data about your credit behavior and payment history. Things that will lower your credit score by up to a few hundred points consequently put you in the “bad
credit” pile include:

1. A credit report that contains errors
2. Defaulted payments across all types of accrued debts
3. Bankruptcy, foreclosures, liens, and lawsuits
4. Exceeding your card limit and more

While reading over your credit report might not make for the most fascinating literature but remember that your credit score conveys to banks and various lenders how well or poorly you can manage your debt. So, stay on top of your bills, ensure the accuracy of your credit history and use your credit cards carefully.

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