Having below-average credit is no picnic, but there are ways to boost your three-digit score.
When it comes to averages in the financial world, most people are talking about the middle point in a set of numbers. Some of the numbers in a set score above the average and some fall below. That’s just how averages work.
So, when Experian reports the average overall credit score rose to 688 during COVID-19, the credit reporting agency crunched some consumer credit scores that exceeded this three-digit score, and some that didn’t.
In its annual State of Credit 2020 report, Experian reveals the top five states with the highest scores in the country:
- Minnesota (720)
- Vermont (712)
- South Dakota (712)
- New Hampshire (711)
- Wisconsin (711)
If you live in any of these states, there’s a good chance you have a prime credit score, which means you’ll find it easier to take out loans or increase your credit limit.
But according to the law of averages, plenty of people living in these states don’t quite make the average.
What happens if it’s you? Let’s find out.
Table of Contents
What Does Subprime Credit Mean?
VantageScore defines subprime credit as anything between 300 and 660, on a wider scale that spans 300 to 850. This scoring model splits subprime scores into two subcategories:
- Poor (560–649)
- Very Poor (300–549)
The lower you fall on this scale, the more trouble you’ll run into when trying to borrow money. Plenty of online direct lenders and banks want to see a high score before they’re willing to lend you money. If you don’t have what they want, they’ll deny your request for funds.
That doesn’t mean you won’t be able to borrow if you have a subprime score. Some financial institutions understand anyone might need help in emergencies, even if your score is less than average.
Suppose you’re one of the people living in Wisconsin who’s below the state average. This number may not matter most days, but it may become an issue if you lose a filling and have to see the dentist.
If you need help paying this unexpected expense, you may find fast borrowing options in Wisconsin due to a quick online application process. While you may be able to qualify for these loans with bad credit, make sure you can afford to pay back what you owe.
Take the time to research the rates and terms of any loan you find online. Even the best online loans Wisconsin has to offer will come with fees, so make sure you can handle these fees before borrowing installment loans for bad credit.
How to Fix Bad Credit
Installment loans for bad credit are a backup so that you have a financial safety net to catch you if you stumble in an emergency.
With that covered, you can focus on improving your score so that you can qualify for loans online with lower rates and fees the next time you need to borrow money.
So, what do you need to do to boost your score? Check out the habits below to see what builds positive credit history that will impact your score:
Pay Bills on Time
Lenders want to see you can pay your cash loans back on time, so a flawless payment history will go a long way to boosting your score. Make a budget and automate payments so you don’t miss a due date again.
Pay Down Revolving Credit
Paying your credit cards on time is a must, but you’ll also want to keep your balances low. A low balance will maintain a good utilization rate, which is the next biggest factor of your score.
This rate compares how much of your available credit you’ve used to your available limits. As a rule, you want to keep this ratio as small as possible.
Don’t Open or Close Accounts Often
Sometimes, you have to undergo a hard credit check when you open a new account, and this check may impact your score. Closing your account, on the other hand, may negatively impact your utilization ratio.
Wait
Yup, you read that right. If you have serious delinquencies or a bankruptcy in your file, you have to wait until they fall off your record after seven to ten years.
In the meantime, focus on paying bills on time and paying off your balances. These habits ensure you’ll have nothing but good stuff in your report once these bad entries expire.
Bottom Line
Being below average when it comes to your finances can be tough, but there’s a way to handle it. Whether or not you need an installment loan for bad credit to help in an emergency, focus on how you can change your habits. Little things can help you make positive changes in your file. Stick with them long enough and you might just become above average one day!
