California Bad Credit Loan - Focus on how to Raise Your Credit Score

Before we discuss how to raise your credit score, let’s take a quick look at how your credit score is calculated. The major determinants of credit score are the following: on time (or late) payment of financial obligations and debts (35%), your ratio of current revolving debt (ex: credit card balances) to the total available revolving credit (ex: credit limits) (30%), your length of credit history (15%), your types of credit used (installment, revolving) (10%), and your credit levels obtained in past (10%).

Arriving at your credit score is based on the previous formula, although there are steps you can take to augment these variables. Let’s take a look at each variable with a focus towards what is in your power to help you raise your credit score.

On time (or late) payment of financial debt:

Making sure you pay your bills on time is extremely important when it comes to maintaining a high credit score. Any payment that is more than 30 days late can affect your score. (Note: if you get a bill on the 1st of the month but it doesn´t come due until the 15th, it does not become 30 days late until the 15th of the following month.) Once a bill is 30 days past due, the issuing creditor can report this information to the credit bureaus. Typically, however, creditors will not report damaging credit information to the bureaus until 60 to 90 days after it is past due.

If a borrower has limited funds one month and must decide on whether to pay Bill A or Bill B, the smart move (less damaging to your credit score) is to pay the higher of the two. Also, avoid declaring bankruptcy as it will affect your credit score for at least 7 years. The better move for most borrowers is to work with a credit counseling service that can help improve your credit score.

Lower Your Ratio of Revolving Debt:

If you can stay between 10-30% of your maximum credit limit on each credit line, and you do not exceed 50% on any credit line, your credit score will not be adversely affect. This can be difficult, especially when you are transferring debt to low interest credit cards, must make a large purchase using credit, etc. From a credit score perspective, lowering your ratio of revolving debt will lead to a higher score than consolidating everything into one credit line.
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California Bad Credit Loan