Goals are good, like improving a 557 credit score. Achieving them is better. Exceeding them is the best!
Just ask Cesar F.
Cesar came to us with a 557 credit score. He needed to improve it to 620 to qualify for a mortgage but set a personal goal of 650. He paid down his credit card balances, his counselor had two collections removed from his credit report, and he ended up exceeding his goal with a 655 score!
How can high credit card balances cause a 557 credit score?
Having a high utilization ratio can hurt your credit scores – even when you make the minimum required payments on time every month. It also makes it increasingly difficult to qualify for more credit. In addition to the impact on your 557 credit score, high credit card balances can increase your debt-to-income ratio (DTI).
Lenders look at your DTI ratio to gauge how much of your income currently goes to debt payments. A lower DTI signals to lenders that you have room in your budget to take on more debt without overextending yourself. On the other hand, a higher DTI might raise red flags, suggesting you could struggle to manage additional monthly payments.
In general:
- A DTI below 36% is good and indicates you have a manageable level of debt.
- A DTI between 36-49% is acceptable but may make it harder to qualify for some loans or the best interest rates.
- A DTI above 50% could limit your borrowing options and indicate that you’re at risk of becoming overwhelmed by debt.
What can and can’t be removed from my credit report?
As we’ve highlighted in a previous Credit Education blog, it’s crucial to understand which items can legally come off your credit report and which must remain. The reality is that improving your 557 credit score isn’t about erasing your financial past. It’s about ensuring your report is accurate and making positive changes moving forward.
There’s a lot of misleading information when it comes to credit repair. Some companies claim they can eliminate all negative marks from your credit history. That’s simply not the case. In fact, removing truthful negative information is against the law.
Under the Fair Credit Reporting Act (FCRA), credit bureaus must report only verified, accurate information. For example, if you’ve missed a payment or defaulted on a loan, that record can legally stay on your report for up to seven years. Bankruptcies, depending on the type, may remain for up to 10 years.
At CredEvolv, we want to be clear: no company or individual has the legal ability to remove valid negative items from your credit report. However, the certified, nonprofit credit counselors on our platform can assist you in disputing inaccuracies or outdated details that could be unfairly causing your 557 credit score.
These professionals are trained to identify reporting errors and questionable practices. Their expertise helps ensure that your credit report reflects only what truly belongs there, giving you the best opportunity to improve your financial standing.
In Cesar’s case, the legitimate removal of two collections accounts from his credit report meant the difference between simply achieving his initial credit score goal and surpassing it. Go Cesar!
Read more credit success stories here.