My Credit Score is Low and I Don't Know Why!

Many people find that their credit score is low (Below 650) and don’t understand why. Because of the way that the Credit Bureaus have setup their scoring it can be very confusing. It is important that you try not to understand what causes your score to be that, you want to be confident that you can influence your score by your actions.

Start by understanding that late payments are very damaging to your credit score. Payment history makes up 35% of your score and affects it a lot during the first year. Each year after that it will weigh less on your score but it will affect it for as long as the Credit Bureau reports it. Most report information for up to 4 years but it can be reported for up to 7 years.

Payment history is the most important thing to your credit score. So when you are deciding what you should do if you have a financial problem, make the minimum payment at least on time. By doing that you can always make a larger payment later but if you don’t make your payment on time, your credit score will go dramatically down. The amount of damage depends on the Credit Bureau because each Credit Bureau scores things just a little bit differently.

So if you have an unexpected bill or some other financial problems make sure that your bills get paid on time even if it is only the minimum payment. This will protect your score and keep you from having to work through a late payment. Even if you talk with your credit card company and they tell you it is fine to make the payment late, be sure they will report that late payment to the Credit Bureaus. The Credit Bureaus have the right to report accurate information to your credit history report.

Be sure you review your credit report at least once a year. I personally think that you should review it twice a year and dispute anything on your report that is inaccurate, misleading or simply not yours. By keeping your credit report accurate you are less likely to be surprised by something appearing on your report. Good credit is not easy to get and getting it is very important to your financial life.

Mel Jensen is a retired Customer Service Manager with Ovation Credit Services.