How to get off the credit bureaus “Naughty” list

Kenna Credit Care Tips

Thursday, December 11th, 2014

Tis the season to be jolly, but it’s hard to avoid becoming a Grinch when your credit score is two sizes too small. Certainly, lower credit scores impact access to credit, but they also cause less than favorable terms.

Credit Cards - Save $1,000! – In November, 2014, according to Credit Karma, the average interest rate paid on a credit card by someone with bad credit was 20.08%, whereas, the average rate paid by someone with good credit was 13.44%. With the average US household credit card debt of $15,608, the monthly interest payment is $86.37 less for a person with the same debt, but good credit. That is more than a $1,000 for the year. Wouldn’t it be nice to have an extra thousand dollars this Christmas season?

Home Mortgage – Save $100,000! - According to, the national average annual percentage rate, or APR, on a 30-year fixed-rate mortgage for a person with a FICO score over 760 is 3.15%. In contrast, the national average for a person with a credit score between 620 and 639 is 4.74%. With the average home loan at $280,500, the difference in monthly payment is $256 or almost a hundred thousand dollars over the life of the loan.

Get back on the “Nice” list in months – A credit score represents the risk a lender takes when you borrow money and a good credit score is established by good credit practices over time. Whether a job loss, a health issue, a financial mistake, a lack of credit education or whatever the reason that led to you being on the credit bureaus “naughty” list, you can get back on the “nice” list in months rather than years.

50% of score – Current state – While 50% of a credit score is based on payment history and length of credit history, the other 50% is based on current factors that can be impacted dramatically in the present. Foremost of these is “Amounts Owed” or “Utilization”, which represents 30% of a credit score. Boost your credit scores significantly by lowering your overall balance-to-limit ratio. Those with the highest credit scores report less than 10% balance-to-limit ratios.

50% of score – Historical – Half of a credit score is based on payment history and length of credit history. That’s in stone, right? Wrong. The Fair Credit Reporting Act requires credit bureaus to delete anything that is inaccurate, unverifiable, misleading, or outdated on a credit report. When the right approach is taken, disputing derogatory items on a credit report can reap high rewards. Not to mention the opportunities afforded by working directly with creditors.

Nobody wants to be on the credit “Naughty” list, but most people struggling with poor credit simply take the approach to “wait-it-out”. The reality is it is likely to take years if ever to make it on the credit “nice” list with that approach. Taking a pro-active approach to understand credit scoring and actively working with credit bureaus and creditors can get you back on the credit “Nice” list in months not years!

Post a Comment