A lot of side effects go along with having credit problems. One of the worst is the paralysis that people experience — that reluctance to check credit reports for fear of being faced with damage that is beyond what one expected. Like avoiding the doctor for fear of receiving a scary diagnosis.
Perhaps you fear that you have the lowest credit score possible, a 300 across both the FICO and VantageScore brands. If this thought has ever crossed your mind, relax. It probably isn’t true. And even if you are currently sitting on a credit score of 300, you have nowhere to go but up.
The first step in a repair strategy is to rededicate yourself and check your three credit reports and scores from Equifax, TransUnion and Experian. No matter where your scores fall, you’ll be better off knowing just how bad your credit reports have become so you can come up with a plan to fix them.
Credit Score Ranges
As mentioned, the lowest score is 300. FICO and VantageScore scores are currently the most popular brand of credit score among lenders and most versions of their scores range from 300 to 850.
While 300 to 850 is the most common credit score range, some scoring models are designed differently. Some of FICO’s scores, for example, are designed with a range of 250 to 900. Earlier generations of the VantageScore score ranged from 501 to 990.
And just for reference, here’s how lenders are likely to see you in the context of your scores.
- 300-579: Very poor. Pretty much untouchable.
- 580-669: Fair. You’re still considered to be sub-prime.
- 670-739: Good. Now you’re starting to get competitive offers.
- 740-799: Very good. Now lenders are starting to throw money at you.
- 800-850: Exceptional. The chance of you missing payments is almost zero percent.
How Long Does It Take to Improve Credit Score?
Credit scoring models help lenders measure your creditworthiness by evaluating the information on your credit reports, at that point in time. Your score indicates how likely you are to pay your credit obligations. Lower scores mean you’re a higher-risk borrower and higher scores mean you’re a lower-risk borrower.
However, even if your score indicates you’re a high-risk borrower, that doesn’t have to be your reality forever. Your scores will only be low as long as the information on your credit reports indicates elevated credit risk. If you improve your credit history, your scores will rebound and start moving in the right direction.
Here are a few tips that will help:
- Make every future payment on time. No exceptions!
- Pay down your credit card balances. The lower your balances the higher your scores.
- Consider opening a few positive accounts, if needed.
- Don’t apply for new credit too often. Hard inquiries can lower your scores.
Best Way to Increase Credit Score: Give It Time
It takes time for a poor credit score to recover. But there’s good news as well. Whether you have a 300 score, a 579 or even a pretty decent score, the impact that any negative credit information has on your scores will lessen over time.
When a late payment first appears on your credit reports, it does the maximum amount of damage to your scores because it’s current and recent. As you get caught up on your payments and the late payments becomes older, their impact will subside. After enough time passes, negative information will be removed from your credit reports and their impact will cease.
And finally, be realistic with your expectations. It takes a history of bad credit to end up with scores at or near 300. It’s going to take as long or longer to improve them to the point where you’ll start getting competitive offers from lenders.