Credit scores range from 300-850. That means that if you have a score in the 300 range, things are about as bad as they can get. Before we talk about what needs to be done to improve upon this score, let’s talk about what you can and cannot do with it.
You won’t be able to buy a home if you have a score in this range. At least, you won’t be able to get a mortgage with a 300 score. If you have enough cash to purchase a home, you would of course be able to buy a home.
You also won’t be able to get an auto loan with a score in this range, at least not from a bank. The exception to this rule is that some car dealerships provide expensive loans without checking credit.
Signature loans will also be impossible to qualify for if your credit is this bad. In fact, these are the hardest to qualify for.
I used to have really bad credit and it affects you in ways you don’t anticipate. For example, you won’t be able to qualify for most cell phone service providers without putting down a large deposit. When I had bad credit, it cost $400 per line to get a cell phone.
Many other services check credit before allowing you to have an account. Here are a few examples: satellite television, home utilities, gas for the home, and many more.
If you have a score in this range. Do what you can to turn it around. Here are a few suggestions:
1. Stop paying bills late right now. If you can get even six months of paying bills on-time, it will make a big difference in your score. Lenders will also be able to see that you’re changing your ways when they look at your credit report.
2. Open two revolving accounts. If you already have two credit cards, you’re already set. If you don’t have any, you need to get some. I had to get secured cards when I had bad credit because I couldn’t get regular ones. Without revolving credit accounts, your credit score won’t build up.
3. Keep the balances low on your credit cards. High balances really affect your credit score in fact the balances on your cards account for 30% of your credit score.
4. Be patient. You will be amazed at how quickly your credit will change. Within six months you will see significant progress.