Anne Weselty
Anne Weselty, 32, lives in Georgia and was just turned away from another mortgage loan. When she was getting her education in medical school, she never dreamed she would be in her early 30’s and not own a house. Each bank she goes to turn her down because of some monumental mistakes she has made with her finances. Anne went to the University of Colorado Medical School and took out many student loans to get through school. Because she was so strapped for money in medical school, she went ahead and took out a few lines of credit.
As months passed, she forgot to pay her bills on her credit cards, and now they are all sitting in collections, marked “UNPAID” and her student loans are growing higher interest rates each year. Anne is trying to pay back the collection agencies, as well as her student loan companies. However, it is just so difficult because all of her credit card interest rates are sky-high and she cannot seem to find a mortgage lender. Therefore, she is not acquiring equity in a house or demonstrating her good skills with credit.
What does this score mean?
If you have a credit score around 400, it is assumed that you already know that this is not a desirable credit score. However, this score can be improved over time, with just a few steps. If you have a credit score around the 400’s, you can be held back from enjoying some of life’s biggest events. For example, with a credit score around 400, you would have an incredibly difficult time finding a lender for a mortgage, getting a credit card with even a semi-reasonable interest rate or even leasing an apartment.
How do you get a credit score around 400?
If you find yourself with a credit score around 400, you might have made some of these mistakes with your finances.
- Having bills that you have not paid.
- Having accounts with collection agencies that are not paid.
- Consistently being late on payments.
- Having a recent foreclosure on a house.
- Having more than one item in collections.
- Having claimed bankruptcy recently.
- Having an open loan – for example, a student loan.
How can you improve this credit score?
In order to improve this credit score, consider taking some of the following steps:
1) Get some lines of credit open and make sure to pay off your statement, in full, each month.
2) If you have an account in collections, you should pay the amount due. There is a huge difference between a collection account that is “PAID” and “UNPAID”. This could be the difference in you getting approved for a lease or being rejected.
3) If you have more than one account in collections and do not have the money to pay them all off immediately, you should try paying off the items with the largest monetary value, opposed to the smaller values.
4) If you have troubles with your credit score, you should try talking to a credit counselor. Each credit situation is different and therefore, the solutions vary for each person.
5) Give it time! We know that it can be a lot of pressure to wait for a score to go up. However, this will not happen over night. Time will heal this credit score – if you take necessary measures to help.
