If you’ve gotten into financial trouble, you are not alone. Nearly 8 out of 10 Americans live paycheck to paycheck, which means most of us are one injury, illness, or layoff away from accumulating debt. Unfortunately, knowing you are not alone doesn't necessarily make it easier to regain your financial footing. Repairing your credit, on the other hand, does. With a high score comes low interest rates, which means more affordable financing for major purchases. Having good credit will also make it easier to pursue debt relief options like consolidation. Here is what everyone should know about boosting their credit score so they can get back on track.

What Goes Into Calculating My Credit Score?

More than a dozen factors can impact a credit score. When people find themselves in financial trouble, though, the most likely factor that will hurt their score is missed payments. The amount of debt you owe is also a major influencer, as is the variety of accounts. Having several different kinds of accounts—like a mortgage, car loan, and student loan, for example—will lead to a higher score.

If you only have credit cards, on the other hand, it will result in a lower score, especially if they’re all maxed out. For revolving accounts, the utilization percentage plays a big role in the score. In general, it’s best to keep utilization below 25%. That means if you have access to $10,000 in revolving credit, you should never carry a balance of more than $2,500 across all accounts.

How Can I Improve My Credit Score?

1. Make at Least the Minimum Payment Every Month

Making regular, on-time payments is perhaps the single most effective way to improve your credit score over time. While it’s best to pay more than the minimum every month to pay down debt faster, covering at least what's due is critical for repairing credit.

2. Obtain More Credit

Obtaining more credit will reduce total utilization; however, you should not open new accounts. Instead, you should request increases on current accounts. When you open new accounts, lenders do what’s called a “hard pull” to review your credit. While a lot of hard pulls will hurt your score, “soft pulls” will not. Just make sure to confirm that a request for a higher line of credit will result in a soft pull instead of a hard pull.

3. Keep Old Accounts Opened

Having access to lots of credit may be what got you in financial trouble in the first place. Since the average age of each account affects the overall score, though, it’s best to keep your oldest accounts opened—as long as you have the discipline not to use them. Older accounts can raise your score, while newer ones can lower it.

If you’re in financial trouble, get in touch with Pearce Law Firm. Located in Foley, Bay Minette, Gilbertown, and Atmore, AL, this practice is committed to helping those who feel as though they've hit rock bottom. Their areas of expertise include bankruptcy law and criminal defense. Whether you want to stop creditors from harassing you or declare chapter 13 bankruptcy, you can rely on them for strategic guidance. To learn more about their decades of experience serving the community, visit their website. To schedule an initial consultation, call (251) 301-8250.