Credit scores lying in the range of 580 to 669 are considered fair. However, a credit score of 600 will make borrowing hard for you. You will come under the sub-prime category, which means you will pay higher interest rates, higher insurance premiums, and you might be denied mortgages. The good news is that you’re only 69 points away from the ‘Good’ credit range, and taking steps towards improving your credit score will yield quick results.
Late payments are one of the primary reasons behind low credit scores. A single late payment could reduce your credit score by up to 100 points. The first thing is to find out how late you are on the payment. As per the Federal law, a creditor can report a late payment only when its 30 days past the due date, so if you’re a week or even 15 days late, your credit score will not be affected. However, if you’re past the 30-day mark, call your creditor immediately and find out if they have reported the payment. You should start with a corrective measure, and make all the future payments on time. It is critical to understand that a late payment will stay on your credit history for at least seven years, although its impact on your credit score will fade with passing years.
Debt collectors often call delinquent borrowers to collect debts, but it should be within the federal limits. If you’re getting multiple calls from your debt collector, the first thing to do is to speak with them once and verify their claim. If the debt is legitimate, explain to the creditors your inability to pay and negotiate for a repayment plan. However, if you are not in the position to pay and debt collector continues calling:
Ask them to stop calling and send the information over email.
Send them a letter to stop calling you. Most of the debt collectors will honor this request. However, they will send you letters or contact you if they decide to sue you or take further action, so make sure to read every communication letter carefully.
If the creditor contacts you even after your letter, have a lawyer send them a notice. You can channel all of their future communications through your lawyer, ensuring that you have peace of mind.
It is critical to understand that the Fair Debt Collection Act (FDCA) prohibits debt collectors from calling your employer, neighbors, or family friends unless you approve it. Similarly, they cannot use disrespectful language, call at unreasonable hours, or harass you in any way. Keep a record of their calls, nature of the conversation, and any harassing incidents. You can sue the debt collector if he violates any of the guidelines listed under the FDCA.
If you have a bad credit score, here is what you can do to improve it.
Check your credit score for any mistakes and report them to the respective reporting agency.
Start making payments on time.
Find out about credit-repair programs and enroll in one. (Experian Boost or UltraFICO)
Lower your credit utilization rate and consolidate debts for easier management. However, do not close any old lines of credit, as it will lower your overall credit access and increase your utilization rate further.
Limit your credit applications and time them to avoid multiple hard inquiries.
Monitor your credit and be patient while working on improving your score.