Your credit score is probably low because you have high credit utilization, derogatory marks on your credit report, or insufficient credit history.
Credit utilization plays a significant role in shaping 20% to 30% of your overall credit score, depending on the scoring model used. So if you have high balances compared to your credit limits, high credit utilization could be the cause of your low credit score.
Derogatory marks on your credit report include late payments, collections, bankruptcy, and some items of public record. These negative items indicate an inability to handle credit responsibly, so they can also weigh down your credit score.
Insufficient credit history means that your experience as a borrower is somewhat limited. As a result, you will not benefit from the length of credit history portion of your credit score as much as someone who’s used credit for years.
You can find out exactly why your credit score is low by checking your Credit Analysis through your free WalletHub account. WalletHub's free credit score simulator can also show you how different actions will affect a low credit score and how long it will take to get a high score.
Whether your credit score proves to be truly low (i.e. a bad score of 300 to 639) or just lower than you’d like, the source of the problem will be the same: your credit reports. All credit scores are based on their contents, so it’s also a smart move to carefully review your reports for inaccurate records or signs of fraud (which you should dispute immediately). Plus, by reviewing your updated credit report and score every day, as only WalletHub enables you to do for free, you’ll learn how to differentiate normal credit-score fluctuations from serious, long-lasting damage.