Bad Credit Scores - How Do You Get Them?

There is no doubt that credit scores and credit histories have an impact on an individual’s life. The impact can be small or huge, depending on what a person will be using the credit history for. The reasons for getting a less-than excellent credit standing can sometimes be controlled by the person (like how he manages his finances or how diligent he is in paying his bills); there are also times when the reasons are beyond an individual’s control. Whatever the reasons are, it’s best to discuss how they affect the credit standing, and how it in turn affects a person’s way of life.

In a nutshell, bad credit scores are connected to an individual’s name and records when one or more factors are considered. First is a history of late or missed payment of bills. This may be deliberate or not, but past credit history accounts for about 35% of a person’s credit score. However, while the bad entries in the credit history remain in the credit file for up to 6 years, the significance of late or missed payments may be reduced in time. In cases when payments are made on time for at least the last 12 months, the negative notations will start to have reduced effects on the credit standing. 

Another factor that adversely affects a person’s credit standing is the length of time of his stay at his current address. Lenders thrive on seeing signs of continuity. In general, a score is more likely to be higher for a person who has been residing in the same address for the past 3 years. There might still be a small effect if a person has 2 addresses for the past 3 years; multiple addresses in the span of that 3 year time frame will have the most negative impact. It is also typical to have a low score if a person has only been staying in his current address for 6 months or less.

Continuity in employment status is also a big influence in credit scores. It is common for lending institutions to look for someone who has been in the same company for a certain number of years. Applicants who have been staying long in the same company are more likely to have a higher score than the ones who have been in the company for a short period of time. That said, it is then natural to expect a low score for someone who has changed jobs/companies for 2-3 times in the last 3 years. It is then a wise decision for individuals to wait until they have been in their current job for a while before attempting to apply for a loan.

Numerous credit applications will have a huge impact on credit standing as well. Multiple applications for credit (especially credit cards) in a short or limited period of time will have a negative effect – they give the idea that a person is desperate to get his hands on a credit card or to extra finances. It is generally acceptable to make one credit application in a span of one or two months; this should not have a negative impact. However, is a person has already been declined numerous times for his credit application, it is recommended that he should not make any new applications for 6 months, to give his records a time to breathe.

Having a bank account will greatly contribute to a high credit score. However, it should be noted that a recently opened bank account will have a lower score, compared to one that has been in existence for a longer period of time. The biggest negative impact on credit scores is if an individual does not have a bank account at all.

There is nothing worse than being declined for a credit application just when it is most needed – all because of bad credit scores. To avoid being in this situation, the best thing to do is to refrain from doing the things that are proven to lower credit scores. If they can’t be avoided, then the next best thing to do is to wait for the proper time to re-build the credit standing. After all, strengthening and re-building an individual’s credit history will not only affect his present lifestyle, but his future as well.