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4 Reasons Your Credit Score Is Low & What You Can Do About It

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In a Nutshell

In this article, you’ll learn how to check your credit report for errors and how to deal with negative entries on your credit history, like judgments, bankruptcies, foreclosure, and repossession.

Written by Attorney Tori Bramble
Updated August 1, 2023

Credit scores are very important. Your credit score — also called a FICO score — can be the difference between getting a loan, job, or apartment or not. Importantly, lenders use these scores to decide whether to lend to you and at what interest rate. Credit scores range from 300, which is considered a poor score, to 850, which is the best credit score. Having a low score can limit your opportunities, but the good news is that there are many factors that go into your score and many ways to increase it.

How To Check Your Credit Report

To find out why your credit score is low, you should first look at a copy of your credit report. Your credit report shows your credit history as reported by your creditors or lenders. It details how you’ve handled your credit accounts, including information about your payment history and missed or late payments. It also shows:

  • Your credit mix, or how many different kinds of credit accounts you have open; 

  • New accounts and any hard inquiries from lenders within the last two years; and

  • Your credit utilization ratio, or how much of your available credit you’re currently using. 

It's important to regularly check your credit reports to make sure that the information on them is complete and free from errors. You can order your credit report from the three major credit reporting bureaus: Equifax, Experian, and TransUnion. Each bureau’s credit report may be slightly different because some lenders and creditors may not report your account information to all three. 

Under federal law, you can get your credit report for free from all three credit bureaus once a year. To get your free credit report from each credit bureau, visit Once you receive your credit report, you can analyze it to figure out what information on the report is pulling your score down.

Your Credit Score

Your credit report doesn’t show your credit score, but you can often get a free credit score from a financial institution like a bank you have a bank account with or a credit card company. Your score is like a grade. It gives lenders a sense of how much of a credit risk you will be and how well you’ve handled credit accounts in the past.

Very importantly, lenders use your credit score and credit report to make decisions about whether to lend to you, how much to lend, and at what interest rate. Also, landlords and utility companies often check your credit to decide if you need to provide a security deposit to lease an apartment or get utility service. There are a few different credit-scoring models. The two most popular are FICO and VantageScore. This is why you actually have more than one credit score, and each may vary slightly. Still, most lenders agree about the range of what’s a good credit score and what’s a bad credit score.

Here are four common things that may be dragging your credit score down.

1. There Are Errors on Your Credit Report

More than a third of Americans have at least one error on their credit report. From incorrectly listed personal information to account errors, incorrect information can damage your credit score. Also, if your personal information on your credit file is incorrect, lenders may not be able to get your credit report and credit score. This is why it’s a good idea to check for errors in your credit report. If there are mistakes on your report, you should dispute them. This is important if you want to take out a mortgage or car loan so you can get the best loan terms and interest rates. 

How to review your credit report for errors.

It’s critical to review your credit reports for mistakes. Pull your credit report and then run through these steps:

  • Make sure all accounts are yours. Carefully analyze the entries on your report and the accounts listed. Make sure they all belong to you. If you have a common name, someone else’s negative information could be on your credit file. A creditor may have also accidentally placed another person's personal loan, auto loan, or credit card payments on your credit report.

  • Check for incorrect details on your accounts. Creditors who furnish information to the credit bureaus sometimes make errors. Some typical errors include reports showing an open account that's actually closed, reporting the wrong balance, or listing you as the account owner when you're just an authorized user.

  • Verify your personal details. Your credit reports show confidential personal identifying information, including your name, current and past addresses, birthday, and Social Security number. This information may be listed incorrectly. Most personal information errors are clerical mistakes. But sometimes, this is a sign of identity theft. Either way, it’s important to address it and get it corrected.

  • Look for fraudulent accounts. Identity theft is common. To combat it, look for fraudulent accounts on your credit reports. An identity thief could use your personal information to open a new credit card account and run up charges.

How to remove errors.

If you find an error on your credit report, contact your creditors, crosscheck what you have with their records, and dispute the information if it’s incorrect. Ask them to remove or correct the information with the credit bureau. You can also contact the credit bureaus directly to dispute errors. You’ll need to explain your case and provide any documents that support it. You can do this online or by writing a letter. The FTC has a sample letter you can use to file disputes. 

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2. Collection Accounts and Judgments Are Listed on Your Credit Report

When one of your original creditors decides that you won’t pay your debt, they can charge it off and sell it to a collections agency or get a court judgment against you to try to collect on past-due credit card debt. Either will bring down your credit score. It can be challenging to remove this information from your credit reports if it’s accurate. 

Removing Judgments

Civil judgments happen when a creditor sues you for money that you owe and wins. There’s more than one way you can remove judgments from your credit report. First, if there was a judgment issued against you in error, you can try to get rid of the judgment by asking the judge to vacate it. Vacating the judgment simply means it gets removed from your court record. This might work if you weren’t served with the proper legal papers. If you’re successful with your dispute, the court can remove the judgment from your credit report. You can also dispute the inaccuracies on your credit report with the credit bureau where the judgment is listed.

While judgments aren’t part of your credit score calculation, they’re still public records and can affect your ability to get new credit or loans. Lenders may still look to see if there are any outstanding judgments against you, and if they find them, they can turn you down or require you to pay them in full. So it’s good to investigate if you’ve got legitimate judgments against you. And if you have inaccurate judgments, you should address them.

Removing Inaccurate Collections Accounts

If you have inaccurate collection accounts on your credit report you can dispute the error directly with the credit bureaus and/or with the original creditor. Each credit bureau’s website has a dispute form you can use to do this. Even paid collections accounts will show up on your credit report, but you can contact the debt collector or original collector and ask them to remove them. This is called asking for a goodwill deletion. 

You can find a goodwill deletion letter template online. Basically, you write the creditor and explain why you didn’t pay the debt. You must have a good reason, such as a medical emergency or job loss. Then you ask the creditor or collection agency to remove the collection from your report as a gesture of goodwill.

Other Ways To Remove Information

If accounts are older than seven years they should fall off your credit report. Most of the time they’re automatically removed by the credit bureau. If you see an account that’s more than seven years old on your report, you can write to the credit bureau and ask them to remove it. If an account is less than seven years old, it will be more difficult to get it removed if the information is accurate. With some work, though, it may be possible. Accurate information often can’t be removed because of the Fair Credit Reporting Act, which was passed to make sure that your credit file contains accurate information. 

If you have the money and don't have a high balance, you can also try to settle your debt. To do this, you’ll have to negotiate with the creditor. You offer to pay part of the debt in a lump sum or through a payment plan if they’ll delete the account from your credit file. Many creditors would rather collect something than nothing, which is why they’ll sometimes settle. This may not work but it doesn’t hurt to ask, particularly if you have poor credit. 

Lastly, you can wait for the negative collection report to drop off your report. This could take time depending on how long ago the collection showed up on your report.

3. Your Credit Utilization Rate Is High

Your credit utilization ratio or rate is the percent of your total available credit you’re using at any given moment. Lenders will look at your credit utilization rate to help decide how risky of a borrower you are. If you have high credit card balances or have maxed out all your cards, they’ll view you as a riskier borrower than if you are only using a small portion of your credit.

In general, aim to use no more than 30% of your available credit. This means 70% of your available credit is unused. For example, if you have a credit card balance of $500 and your limit on that card is $2,000, your credit utilization ratio is 25% (500/2000=.25).

Not only is a low credit utilization rate good for your credit, but it’s also good if you have an emergency because you won’t have to take out new credit to pay for it. Improving your credit utilization rate is also a quick way to raise your credit score. If you're currently using more than 30% of the credit available on your credit cards you can decrease your ratio by:

  • Paying down the balance on your credit cards; 

  • Asking your creditors to raise your credit limit; and/or

  • Applying for a new credit card or personal loan to increase the amount of available credit. 

4. You Went Through a Bankruptcy, Foreclosure, or Repossession

Things like bankruptcy, foreclosure, and vehicle repossession can negatively affect your credit score for 7-10 years. Most of these will impact your credit for seven years. But if you file Chapter 7 bankruptcy, it will stay on your report for 10 years. These negative events can be hard to overcome, so do all you can to avoid them. These items can’t be removed from your credit report if they’re an accurate part of your credit history. They can really drag your credit score down, but their effect on your score will decrease over time. That’s because older negative items on your credit history have less of an effect on your credit score than newer items.

You can help improve your score by proactively rebuilding your credit. Do this by repaying loans on time and paying off credit cards and medical debt.

Let’s Summarize...

Many factors go into calculating your credit score. If your credit score is low, you can do several things to increase it. You’ll need to first pull your credit reports and look at them to understand why you have bad credit. Then you can make a credit repair plan to raise your score and improve your credit. This may involve disputing errors on your credit history, negotiating with your creditors to pay off overdue debt in exchange for removing negative information, or decreasing your credit utilization ratio. Sometimes you simply have to wait for negative items to drop off your report.

In addition to addressing negative items on your credit report, you can increase your credit score by adding positive information. Paying all your debts on time is the first step. If you need help making a plan to improve your credit, you can contact a consumer credit counseling agency for a free consultation.

Written By:

Attorney Tori Bramble


Tori Bramble is a bankruptcy attorney with over 20 years of experience. She is licensed to practice in Maryland and Virginia and has helped over 1,500 clients discharge thousands of dollars and find debt relief by filing Chapter 7 or Chapter 13 bankruptcy. A New York native, Tori... read more about Attorney Tori Bramble

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