When you are trying to bring up your credit score, every new point makes you feel accomplished. When you finally make the leap from a “poor” rating to the “fair” rating, you start to get excited about having more advantages. This excitement soon wears off when you find out that acquiring a line of credit it still quite difficult. It may be awhile before credit companies give you a fair chance, and here’s why.
If you are working on bringing your credit score up, you still may have some collections that show. These can take up to seven year to fall off of your credit report. Your score can improve without these being taken off. When new creditors look at your report, they may be happy with your new score, but not with your collections history. Landlords and other lenders also pay close attention to this section of your report. If you have numerous collections, they may show a large amount of money that was never paid back to lenders.
People often use their money on things like secured credit cards, because these bring their score up faster. Paying of a bill that has gone to a collection agency may only gain a point or two. The reward, however, of getting them off of your report is that lenders may start giving you a fair chance, finally. You can start by filing disputes with the credit bureaus to get these removed.
Regardless of how much your income situation and credit score have changed, your choices are limited. These limitations keep you from moving up faster. You may be only be able to have a secured credit card or one with a low limit. Once you build your reputation with a secured card, you may be eligible for a more traditional fair credit credit cards. Your choices of renting a residence, taking out a car loan, and getting a personal loan may be limited, as well. This changes little by little. To get a fair chance for these opportunities you may end up waiting a while. In the meantime, creditors may ask for proof of income, charge extra deposits or add high interest rates.
Every Point Counts
A fair credit score can change back to poor quickly with only a small change. You may not want to apply for anything new until you can spare a few points. Every application for credit takes a few points off of your score. The irony is, however, that you need new accounts to gain points. Use a secured card until you are at the higher end of the “fair” level. Pay very close attention to your credit report so you can be aware of anything that might be a problem.
When you reach the fair credit score, you are well on your way to having a respectable score. There are going to be several limitations until you reach a higher score, however, these are only temporary. It can be difficult to bring up your score while also adhering to limited opportunities. Make the best use of the few that you have to gain points. Secured cards are an excellent option. While a “fair” score may not feel fair in the world of lending, there are good things to come at the next level.