There are many reasons why your credit score may be low. To understand why it may be low in your situation, you must understand how a credit report works, and how credit scores are determined.
First understand that you have not one credit score but three. You have a score with each of the three main credit repositories. These repositories are also known as credit bureaus and credit agencies. The three credit bureaus all hold a great deal of information about you and your financial past and present.
Your credit score is based upon information contained within your credit report. While your credit report shows your financial past and present, your credit score is supposed to determine your financial future. Your credit score is used to determine your likelihood of defaulting on a loan.
Many Consumer Credit Counseling services can have a sizable negative impact on your scores. Only enter these programs if you truly have no other options for paying off your debt.
Even if you are making credit card payments on time, if they are too close to the balance, this can hinder your score. Also, if you apply for credit all the time.
Credit scores are low often to due to erroneous items on the credit report. Purchase a copy of your credit report. Review it to see if there are false items negatively impacting your score. If you find any error, initiate an investigation by writing to the three major credit bureaus.
If you find your credit score dropping, do not try to get your credit pulled by multiple brokers in an attempt to get approved. This will make your score worse. Going a couple of months with no inquiries will help increase your score.