Credit is a slippery slope. The reason why people have bad credit varies greatly, so part of the answer lies in why you have it. If it was because you lost your job due to downsizing and you had to live on credit for a bit while in career transition, that’s one thing. Bad money management, that’s another.
Here are some additional questions regarding bad credit:
- Does my income and net worth affect my credit score? No, it doesn’t.
- What accounts for my credit score? Most of it is your record of paying installment and revolving credit that’s on time. Also included are collection actions, civil judgments and tax liens against you or bankruptcies.
- What’s one of best ways to improve my score? Pay down your credit card debt, starting with the account that has the highest interest rate. Also, try to use no more than 10% of the credit limit on any account.
- Do early payments on credit card charges improve my score? No, there isn’t anything on your credit report that talks about when a bill was paid.