Your Bad Credit Isn't the End of the World

Worried about your low FICO credit score? Does your credit card debt keep you awake at night?

You're not alone. Money worries plague millions of Americans. According to the Stress in America survey from the American Psychological Association, more than a quarter of U.S. adults say they feel stressed about money most or all of the time. Only 30% rated their financial security as high, while more than two-thirds said that having more money would make them happier.

But here's some good news: Yes, bad credit and high credit card debt does add stress to your life. But neither of these financial missteps are unfixable. As long as you face your financial problems and take some simple steps to correct them, you can build a new financially secure future. (See also: 5-Day Debt Reduction Plan)

Scary Numbers

Many Americans are struggling with their FICO credit score, that three-digit number that lenders use to determine who qualifies for loans and at what interest rate. According to a 2015 report from the Consumer Financial Protection Bureau, about 45 million U.S. adults had such a limited credit history, that they had no FICO scores.

A 2015 report from credit bureau Experian said that nearly a third of U.S. consumers had a credit score under 601. Experian was basing its study on its own credit score, the VantageScore, but consumers who have a bad VantageScore typically have a bad FICO score, too.

These numbers mean one thing: Plenty of us are struggling with bad credit and high credit card debt. If you are, too, it's important to realize that there are five easy steps you can take now to help improve your financial health.

Order Your Free Credit Reports

You can order one free copy of each of your credit reports — the credit bureaus of Experian, Equifax, and TransUnion each maintain a separate report on you — every year from These reports will list your credit cards and how much you owe on each. They will also list the money you owe on car loans, student loans, and mortgage loans.

Credit reports also list any missed or late payments during the last seven years, and will also include any negative judgments, such as bankruptcies or foreclosures, that are up to seven to 10 years old.

Be sure to order your reports and check them carefully. Make sure the information in your reports is accurate. If there are errors, such as a missed car payment that you are sure you paid on time, correct them. Doing this can quickly provide a boost to your score.

Pay All Your Bills on Time

Missed or late payments are the most common cause of a weak credit score. Resolve, then, to pay all of your bills on time. As you do this, you will gradually improve your credit score. Just don't expect immediate results. Depending on how low your score is today, it can take months or more than a year to raise it from the "bad" to the "fair" or "good" level.

Pay More Than the Minimum Each Month on Your Credit Cards

High amounts of credit card debt can also result in a bad credit score. Each month, pay off more than the required minimum payment on your cards. As you cut down on your credit card debt, you'll again slowly improve your credit score. You'll also get the bonus of cutting down on all that interest you pay each month. (See also: Fastest Way to Pay Off $10,000 in Credit Card Debt)

Keep Your Credit Cards Open

If you do pay off a credit card in full, don't close the account. Your credit score is higher when you are using less of your available credit. In general, you never want to be using more than 30% of your available credit. If you close a credit card, you're immediately reducing the amount of credit available to you. If you do have credit card debt, you will then also be immediately using more of it, which could hurt your score. (See also: This One Ratio Is the Key to A Good Credit Score)

Don't Be Afraid to Use Credit Cards

Using credit cards wisely can actually help boost your credit score. If you regularly charge items through the month and then pay them off in full when your credit card bill is due, you are showing that you can maturely handle credit. So don't be afraid to charge that flat-screen TV. Just make sure that you have the cash to pay off the entire purchase when your credit card's due date rolls around.

Are you struggling with poor credit and high credit card debt? What steps have you taken to correct it?

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