There are many factors which can lower your credit scores. Too much debt, late payments, non-payments, and too many credit inquiries contribute to reducing credit score. Almost all lenders use credit scores to quickly identify if a person is credit worthy or not. Most American consumers need loans at some point of their life. If somebody will get loan or not depends mostly on credit scores. This is why it is important to make every effort to rebuild credit score if it has been ruined.
Here are some ways how you can rebuild credit:
- Reduce debt: Pay off your debt as quickly as possible. Keep debt to credit ratio less than 33 percent. If you take too much debt, it will be very hard to get credit in the future.
- Pay your bills on time: Pay all your bills on time. One way to achieve timely bill payment is to setup automatic payments. Paying bills on time is the most important factor to rebuild credit.
- Establish credit history: Use credit cards, car and mortgage loans, and pay bills as agreed. If you do not use any credit, you do not have any credit history. Responsible use of credit for a longer time has higher positive impact on the credit score. Avoid applying for credits too many times and too often.
- Use credit wisely: Avoid using all the credits available to you. You should keep credit balance to total available credit less than 33 percent.
- Monitor credit information and remove incorrect information: You should check your credit report at least two times a year. If you find any errors, apply to the appropriate credit bureau or creditor to correct the information.
If you practice the guidelines mentioned above, we think that your bad credit will turn into good credit in time. You should remember that it takes time to rebuild credit. There is no way to raise credit score overnight. Patience and responsible use of credits are essential for improving credit.