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THE REAL REASONS BEHIND LOW CREDIT SCORES

What Is a Low Credit Score?

Wondering what constitutes a high credit score vs. a low credit score? Generally speaking, the higher the credit score, the better. Different models use slightly different numbers to classify your score as poor, fair, good, or even exceptional. A low credit score would be anything in the very poor, poor, or fair categories below:

  • Very poor to poor (300-579 FICO / 300-600 VantageScore)

  • Fair (580-669 FICO)

  • Good (670-739 FICO / 661-780 VantageScore)

  • Very good to exceptional (740-850 FICO / 781-850 VantageScore)

If your credit score is classified as good, very good, excellent, or exceptional, then you don’t have to worry about a low credit score! But If it is below 600, you will definitely need to consider the best ways to raise your credit core.


Why Does a Low Credit Score Matter?

A low credit score can be problematic if you’re trying to get financing for a house, car, or business venture. It could cause you to be denied the loan you want. If you do get a loan, you’ll be required to pay higher interest or fees than a person with a higher credit score would. A poor credit score can easily cost you many thousands of dollars over the life of a loan.


How Do Most People Get a Low Credit Score?

If you’re like many people, you may not know exactly where your strengths and weaknesses are when it comes to your credit. Many people end up with a low credit score simply because they don’t know the different factors involved, so they don’t know how to manage their credit in the best way. Here are the basic factors that determine your credit score:

  • Your payment history – Making late payments will have a significant negative impact.

  • Credit usage – Owing a large portion of your credit limit can also hurt your score significantly.

  • Length of credit history – Having a short credit history can have a bit of a negative impact on your score.

  • Credit mix – Having only one type of account (a loan but no credit lines, or a credit line but no loans) can slightly harm your score.

  • Your recent activity – Applying for multiple loans in a short period of time will lead to slight point deductions.


Is the Credit Scoring System Out to Get You?

As you can see, there are many things that can deduct points from your credit score. While many people see the system as unfair, here’s the truth: Point deduction technology doesn’t create the problems, it simply exposes the real issues. Luckily, it also provides the ability to correct the problems.

You might have a low credit score because of multiple late payments. But thankfully, the scoring system goes both ways – as long as you know what the problem is, you can fix it. Turn your credit score around by making all your payments on time from now on!


When You Understand Your Credit Data, You Can Raise Your Credit Score!

The first step to improving your credit score is to get a better understanding of your credit data. ScoreNavigator is a simple solution. It uses point deduction technology to figure out what is impacting your credit score both positively and negatively. You’ll get detailed steps that are personalized to your needs along with the tools and resources you need to succeed. Maximizing your credit score has never been easier!

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