It is not impossible to survive with bad credit, but it is difficult. Moreover, it is not cheap. On the other hand, a good credit score opens many doors. But, a strong credit score does not happen overnight.

Benefits of a Good Credit Score

Here are the reasons why you should aim for a good credit score.

Qualify for the best interest rates

If you don’t know by one, the interest rate you get is tied to your credit score. The better your score, the lower the cost you pay for borrowing money.

Better odds for loan approval

Although a strong credit score does not guarantee approval as there is income and debt to consider as well, it increases your odds significantly.

Stronger negotiating power

A strong credit score gives you leverage. A poor credit score limits your choices.

Getting approved for higher limits

By demonstrating that you are able to meet your obligations on time, banks will be willing to borrow you even more money.

Easier approval for rentals

A good credit score makes a potential tenant look promising.

Avoid security deposits

Deposits can be a huge inconvenience but you can avoid them when you establish yourself with your providers.

What Causes a Bad Credit Score?

A bad credit is the result of not meeting your obligations on time or not meeting them at all. This can include anything, from your rent, loan payments to your Eversource CT utility bill. It refers to an individual’s history of poor payment of bills and loans, and implies likelihood that he or she will not honor future financial obligations.

Below are some of the key factors that lead to a bad credit score:

Late payments

One’s payment history accounts for 35% of his or her credit score and delayed payments for over a month are usually reported to credit bureaus, leading to ‘poor’ or ‘very poor’ classifications.

Bankruptcy filing

You may receive a legal protection but filing for bankruptcy is the most damaging event to one’s credit score as it labels you as unable to meet your obligations.


A charge-off means that the creditor has given up trying to get the borrower to make payments. The account holder can no longer make the purchases with the account but he borrower still owes the charge-off balance to the creditor. The charge-off information remains in the credit report for seven years since the time the account became delinquent.

Defaulting on loans

Treated the same as charge-offs after missing more than one payment. It makes one seem as a credit risk who is highly unlikely to pay back the lender.

Tips on Boosting Your Credit Score

Improving your credit scores takes time, but the sooner you address it, the better. By knowing what leads to a bad credit score, it is not difficult to guess what will help you improve your credit score.

Pay your bills on time

Lenders are always interested in how reliable you are when it comes to your bills, simply because past performance is considered as a good indicator of future performance. If you are forgetful, just use automatic payment but be consistent, month after month.

Pay off debt and keep balances low on credit cards

Both have a positive impact on your credit utilization ratio.

Avoid unnecessary credit

Unnecessary credit can harm your credit score in more ways than one. Besides tempting you to spend and accumulate debt, it will also result in more hard inquiries on your credit report and those remain on your credit report for two years.

Don’t close unused credit cards

Unless they are not costing you in annual fees, do not close these accounts as this will increase your credit score. On the other hand, owning the same amount on fewer open accounts can cause your credit score to drop.

Keep in mind that there is no quick fix for bad credit score. Be patient as time is your ally. However, do not forget to monitor your credit regularly so you can spot inaccuracies on time so you can get it corrected before they damage your credit score.


Your credit score is an important component of your financial life. A good credit score is something to be proud of. This is even more true if you had to work hard at improving it. Even if this never happened to you, keep in mind that only a few missed payments are all it takes to get off rack. As the saying goes, it takes a whole life to build a reputation and only a second to destroy it.