Having a low credit score is a difficult and, often, defeating position to be in.  Many Americans find themselves in this situation and have no idea how to improve their situation.  Credit is so important and so integrated into everything we do that finding a place to start can stop you in your tracks.

This article has one job and one job only, to help you stand back and see your situation without frustration so that you can start the real work.  Once started this can go quick and you can see some amazing improvements.

So you have a low score...now what?

Well, first things first...you need to know what is actually being reported on your credit report.  Good news is that you have a legal right to your credit report from all three credit reporting agencies (Transunion, Experion, Equifax) EVERY YEAR.

Here is the link to order your reports.  Remember to get a report from ALL THREE credit reporting agencies

https://www.annualcreditreport.com/index.action

Keep in mind, this is the actual report that every creditor is going to see when you apply for credit.  Review it carefully for accuracy, this is very important.

What your report says...and doesn't say

Everything credit report related is on this report.  Loans (open or closed), credit cards, student loans, mortgages, ect....and how you have paid on those debts.  The report will report if you ever missed a payment, how many payments you missed, and for how long it took for you to pay that payment.  

Your reports also show any public information such as Bankruptcy, liens, and judgements against you. 

You will notice what the report does not tell you though...your scores.  This is frustrating but the annual credit report is your right to accuracy and that is all they need to give you.

How is the credit score determined?

You have to look at your credit score as something that can be raised or lowered by something.  I look at it like this...your score is held down by anchors on strings and pulled up by balloons on strings.  You just need to know what strings to cut that are keeping your score down and attach more balloons to bring it up.

Now that I have reviewed the report...now what?

Always start with the anchors. Those balloons cannot lift your score up much with those anchors holding you down.  If you have a lien or judgement filed against you they need to be dealt with right away.  The report will spell out who you owe the money to, contact them and come up with a solution.  Sometimes you can negotiate a lower balance or a payment plan.  Collections come and go and are more easily dealt with but liens and judgements are there forever...they got to go.

Second attack those collections.  Call the creditors and negotiate a lower balance and/or payment plan.

Once the liens, judgements, and collections have been paid the real credit score healing begins. Now is the time to start adding those balloons to raise that score.  You will do that by adding secured and unsecured trade lines.  Check out my article on how to do that here: internal://1925bcd9-2a91-486b-ba3f-935f3ca87c38