Repairing Damaged Credit
If you have a few blemishes on your credit report, there are some steps you can take to help improve your score. Rebuilding credit involves taking small steps to reestablish your creditworthiness. You have to prove that you are now in a better financial situation and are taking responsibility for your financial obligations. In other words, you are a potential customer and worth the risk.
Your first step will be to ensure that any open credit accounts are in a current status. If you need help through credit counseling, seek qualified assistance so that you can bring your accounts under control and begin repayment.
Next, eliminate credit card debt to further boost your credit score. If you have debt that you can pay off without outside assistance, do so as quickly as possible. You may wish to try strategies to reduce interest rates to increase the amount going toward principal balances. Once you pay the entire balance on a card, keep the card active. Doing so will increase the time period for account ownership, which can help you establish account tenure. Fifteen percent of your credit score is decided by the length of your credit history.
As you resolve any previous credit issues, you will be in a better position to gain approval for new credit. If you do apply for new credit accounts, do so carefully and avoid getting more credit than you need.
Store credit cards generally have the most relaxed approval requirements. This could lead to approval on a major credit card if you maintain a good payment history. On all store and major credit cards, pay off the entire balance every month. Avoid charging more than you can pay in full when the statement arrives.
Maintaining a good payment history on a credit card is a good stepping stone to car loan approval. Installment loans such as auto and home loans are some of the best credit builders as long as you maintain good payment histories. A perfect payment history on a car loan can help you become eligible for a home loan when the time arrives to buy your home.
Following these stepping stones can help you rebuild your credit. Remember that negative credit items can affect your eligibility for new credit for months or even years. Be patient, keep your payments consistent and protect your new credit.