How to Fix Your Credit Score - ConsumerReports.org

But not everything in your financial life counts toward your score. For example, paying rent on time often won’t help, but paying a mortgage on time will. The system usually also doesn’t care whether late payments stem from things out of your control—say, an illness—or your own irresponsibility. And it will punish you for years for a slip-up. Moreover, because it rewards people who already have a credit history—and makes it hard for those who don’t to establish credit—it creates a circular problem that limits options for many.

That’s particularly true for Blacks and Hispanics, who have substantially lower credit scores, on average, than whites, says Chi Chi Wu, staff attorney for the National Consumer Law Center, a nonprofit that works for consumer justice and economic security. For example, a 2019 analysis from the Urban Institute, a nonprofit research organization, found that more than 50 percent of white people had a FICO score greater than 700, while just 21 percent of Black people did.

“Having a weak credit record can hurt your chances for getting a job, because employers often check your credit report,” Wu says. And because landlords and insurers also often check credit reports, a poor score can “prevent you from renting an apartment, or mean you’ll pay more for car insurance,” she says.

Credit scores also suffer from a lack of transparency, some consumer advocates say. We all have many credit scores, each calculated differently, and it is hard to know which score a given lender uses, though knowing could help us build that score.

Worse, consumers can’t directly dispute a credit score, though the credit report data behind scores often have errors. Around a third of the almost 6,000 volunteers for a recent CR study found mistakes in their credit report.

For Williams, building credit had a lasting impact. Several years after buying her house and finding her financial footing, she opened a home healthcare business that she says now employs 60 people and serves more than 100 homebound seniors. “I am blessed to be able to do this work and get the help I did,” Williams says.

Here are some ways credit scores can undermine your financial future and 11 tips for fixing them.

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