Fast & Easy Way to Rebuild a Good Credit Score

Your credit score is based on the information in your credit report and determines your ability to obtain loans and lines of credit, according to a 2006 article in Entrepreneur Magazine. A low credit score makes it difficult or impossible to get credit and results in higher interest rates. People do not always know how to rebuild a credit score and may even take actions that end up lowering the score yet again. Find out how to rebuild a good credit score and obtain a loan with reasonable terms for your next car or mortgage.

Instructions

1

Get all three of your credit reports from the major bureaus and go through them carefully to find any inaccuracies in them. Mistakes could be affecting your credit and causing a low score without you even being aware of it. Request a correction of such mistakes and the credit bureau will make a decision within 30 days. This can help raise your credit score significantly and quickly.

2

Stay current on all your bills. If you are not current on your bills right now, set up payment plans and get caught up as soon as possible. This will improve your credit score over time, but will also provide proof to potential lenders that you have changed your ways and are now handling your finances in a responsible manner.

3

Keep your credit card balances at approximately one-third of the limit. If you are going to charge an item, use a card that will not be put over this level by charging the item. Debt spread over several cards that are not full is better for your credit score than an equal amount of debt all on one, maxed-out card. Avoid accruing enough debt to raise your debt-to-income ratio above 20 percent.

4

Apply for credit only as needed. Applying for many different credit cards or loans makes you appear desperate and lowers your credit score. Avoid applying for additional credit while you are trying to repair your score.

5

Stay in your current home and at your current job. Living in the same home for four or more years and working for the same employer for at least five years adds points to your credit score. This is a simple way to give your credit a boost if you are near the cutoff points on these time guidelines. You can also avoid a worsening credit score by avoiding a move or job change while trying to rebuild your credit.