Making excuses is part of being human. We all have “reasons” for our bad behaviors. But at some point it’s important to stop rationalizing and start making changes — or risk the consequences.
If you’ve been making excuses for neglecting your credit score, you could be in for a rude awakening when it’s time to apply for a loan. Here are some common excuses for credit carelessness – and how to get past them.
1. I don’t understand what a credit score is
Your credit score is a numeric representation of your history with handling borrowed money. The FICO scoring model is most popular among lenders. FICO scores range from 300 to 850, with 850 being the highest. Having a high score means you’ll have an easier time getting a loan, renting an apartment and possibly getting a job.
Now that you know the basics, check out this resource for a more detailed explanation of credit scoring.
2. No one really looks at my credit anyway
Most people think you only need a credit score if you want to borrow money. But the truth is that lots of people look at your credit score. Landlords, insurance agents and potential employers may also review your score – and you’re not borrowing money from them.
3. I’m never going to buy a house, so my credit doesn’t matter
You may not want to buy a home, but you’ll probably want to get a credit card or a car loan at some point. Getting any loan will be difficult if your credit is crummy, so don’t let your score slip.
Also, you never know what the future holds. A mortgage might not appeal right now, but you could feel differently in a few years. Plan for all contingencies by keeping your credit in good shape.
4. I have no idea how my credit score is calculated
It’s true that the exact formula used to calculate your score is hard to find out. But in general:
- 35% comes from making on-time bill payments
- 30% comes from your debt load
- 15% comes from the length of your credit history
- 10% comes from the types of loans you have open
- 10% comes form new credit inquiries
5. There’s nothing I can do to improve my score
As you can see from how your credit score is calculated, there’s a lot you can do to improve it. The two most powerful moves you can make are paying your bills on time and reducing your debt.
It’s also important to start building your credit as soon as possible. The easiest way to do this is by getting a credit card and using it responsibly.
6. I’m scared that my credit score is terrible
Fear of the unknown shouldn’t stop you from checking your credit. We’ve all made money mistakes in the past. The important thing is to get informed and start taking steps to making changes (see No. 5).
Even the worst credit score can be improved, but you’ll have to face the music first.
7. There’s an error on my credit report that I can’t fix
Credit reporting errors are common, but many people think there’s no way fix them. This couldn’t be further from the truth. If you spot an error on your credit report, it’s important to report the mistake – and fast. Otherwise, your score could suffer.
You’ll to contact the three major credit bureaus and report the error in writing. Be sure to provide documentation to support your claim if you can. Their responses will determine your next steps, so check out this resource for more details on how to proceed.
The bottom line: There are no more excuses for neglecting your credit. Use our tips to start tracking your score today!
Credit image via Shutterstock