Keeping score

Facing up to a bad credit score

Your credit score will nose its way into nearly every major milestone of your life, from buying your first car to purchasing a home. Good credit can help you score better deals while a bad credit score can bring you down financially and emotionally. Here are some tips on how to cope if you have bad credit:

Take a look 1

You’ll need to know where you stand before you can put it into perspective. If you've been too ashamed to look at your credit score, do it today. “The credit score is not a reflection of who you are as a person or how accomplished you are,” says Jeff Richardson, a spokesperson for VantageScore, one of the two main credit scoring models. It doesn’t have to be perfect but anything below a 690 on the 850-point scale is going to cost you.

2 Do cleanup

Those looking to build credit or repair a damaged score should first aim for a score of 620 to 640, Richardson says. A score like this gets you out of the bad-credit danger zone, where landlords and lenders will be reluctant to work with you. Do your best to improve from there. A score above 720 will get you the best deals, and a sustained period of healthy financial habits can send it even higher.

Focus your efforts 3

Paying bills on time and keeping credit card balances low make the biggest difference — and doing so month after month, year after year, is what truly strengthens your score. But you may feel the need to do something right now. The first thing you should do is look at your report, available free at annualcreditreport.com, to verify all the information is correct. You may also want to consider small steps that can help over time, such as putting bills on autopay or getting a secured credit card with a small deposit that you pay off in full each month.

4 Let it go

Good credit will give you options and save you money. Remember that a credit score is just an “algorithm to help lenders determine how likely you might be 90 days or more late on a loan,” Richardson said. Don’t give it any more power than that.

This article was provided to The Associated Press by the personal finance website NerdWallet.