Don’t feel alone if you have found yourself with a credit score of 480. COVID-19 has severely impacted the economy, with many people attempting to regain their financial footing after a significant loss of earnings.
Your credit score affects almost every aspect of your financial life. From cell phone bills to internet rates, your credit history comes into play. Seeking a new apartment to rent? Same thing. Bad credit can seriously infiltrate a person’s day-to-day life.
How Are Credit Scores Calculated?
Credit scores are based on the FICO score model created by the Fair Isaac Corporation, but there are other models such as VantageScores developed by Equifax, Experian, and TransUnion in 2006 that are alternatives to standard FICO system.
Credit scores range from 300 to 850 and reflect your creditworthiness. They base these scores on your:
- Credit history
- Number of open accounts
- Total levels of debt
- Repayment history.
- Credit mix
What Does a 480 Credit Score Mean?
Unfortunately, if you have a 480 credit score, the news is not good. A 480 credit score is considered very poor on the FICO model, and individuals with this score should seek ways to improve their credit score to avoid the financial implications.
Don’t feel alone, however. The 2020 figures show that over 16 percent of the American population is in the red credit score-wise. The good news is that you can fix your 480 credit score by following these steps or read a different take from CreditGlory.
How To Improve Your 480 Score
A strange as it sounds, fixing your 480 credit score begins with you requesting your credit score. Each individual is entitled to one free copy of their credit report annually from the three nationwide credit bureaus (you may receive this report by visiting www.annualcreditreport.com.)
In your detailed credit report, you may isolate the incidents that caused your credit score to decline and clarify the issues you need to address to improve your credit score.
What Negatively Impacts Your Credit Score?
Public Information
Public records such as bankruptcy may have a severe impact on your credit score. A Chapter 7 bankruptcy may remain on your credit history for up to a decade and Chapter 13 remains under your name for seven years.
Although you may improve your credit score over the years, the public notice may still affect your success with certain lenders.
Credit Utilization Ratio
Put simply, your credit utilization ratio is how much you owe, divided by your credit limit. Your utilization ratio reflects how much you owe on all your revolving accounts compared to your total available credit. This sum is expressed in a percentage form. Again, you need to:
- Add up all your existing credit card balances,
- Add up all your existing credit limits,
- Divide the total debt balance by the total credit limit, and
- Multiply by 100 and you will find your percentage ratio.
Your ratio should never be over 30% or it may seriously affect your credit score, and both FICO and VantageScore rely on this ratio heavily when calculating consumer credit scores. If you find that your credit utilization ratio is too high, consider paying off your highest card debt to reduce your ratio.
Late or Missed Payments
Very self-explanatory. FICO will keep track of all your late payments. This aspect of your credit history is very important because it makes up over one-third of your FICO score.
Length of Credit History
The length of your credit history can make up over 15% of your credit score. For example, creditors will want to see a credit history that extends past 10 years or even longer.
Total Debt and Credit Mix
When calculating credit scores FICO favors users with several credit accounts and a revolving credit mix.
So, if you have only one type of credit account such as credit cards, think of adding some installment credit loans such as a mortgage or a car loan. This accounts for 10% of your potential FICO score.
Recent Credit Activity
Try to avoid applying for loans or credit cards often or in a brief space of time. These credit checks or “hard inquiries” made by institutions are recorded on your credit report and they may affect your credit score. Your recent credit activities may impact your credit score by 10%.
How Can I Fix My 480 Credit Score?
There are some issues in credit scores that can only be mended over time, such as bankruptcy. However, there are ways to improve your credit score from 480.

A Debt Management Plan
If you find yourself in over your head with credit debt and cannot make the payments, it is best to consider debt counseling. The debt counselor will work with you to arrange a comfortable repayment plan and close your accounts.
It seems counter-intuitive to do this because your credit score will drop considerably, but it may be worth it in the long run. Debt management is much easier to rebound from than bankruptcy.
Otherwise, if you are not at the point where you will take such a drastic step, perhaps meeting with a debt counselor will help you find the best way to pay off your debts and improve your 480 credit score?
Credit-Builder Loans
You have the option of taking out a small loan from a credit union and pay it diligently to improve your credit score. If you are like me and are tempted by the cash in hand, you can choose the option of allowing the credit union to deposit your full loan amount into an interest-bearing savings account.
Once you have paid off the loan, you then have your original amount with interest (https://www.parents.com/parenting/money/family-finances/improve-your-credit-score-fast/).
The credit union reports your payment history to the national credit bureaus and your credit score will improve. Just make sure that your chosen lender sends reports all of your payments to the national credit bureaus.
Make Your Monthly Payments Ahead of the Due Date
It sounds obvious but this is the tried and true way. Pay your debts promptly and be patient.
Conclusion
A 480 credit score is as good a place as any to start to be more financially responsible and to fix your credit score. Just improving your poor rating to a fair rating of 580 to 669 will improve your financial standing considerably.
Not only will you have more credit options, but lenders will offer you lower interest rates and lower fees and rates. You present less of a risk to potential lenders once your credit rating improves and their interest rates will adjust accordingly.
If you find yourself in over your head with debts, seek advice from a professional debt counselor as many strategies will reduce your stress and improve your credit score.
Learn from your mistakes and use your credit report to isolate the bad choices that led you to your 480 credit score. It is never too late to teach yourself new habits and start along the road to your perfect credit score!