Improving Your Credit

Raising your credit score, like improving your credit history, takes time and responsible credit behavior. Creditors look for stability in your credit history.

Erratic behavior such as sudden increases in debts or many applications for new credit can lower your credit score.

There are things you can do to make a difference. You can improve your credit score by:

Keeping It Clean

• Check your credit report for accuracy. Report any errors immediately.

• Pay off all collection accounts. Remember that negative credit information can stay on your credit report for 7 years.

• Pay your bills on time. If you missed a payment recently, bring the account current. Don't be late again.
  

Limiting Yourself

• Keep your credit card balances low.

• Don't have too many credit cards.

• Don't open several new credit accounts just to increase your available credit.

• If you're trying to establish credit, don't open too many accounts at once.

Taking It Slow

• Pay off debt rather than moving it around from account to account. Your credit history shouldn't look like a seesaw. Stability is key.

• Don't close unused credit cards as a short-term strategy to raise your score. Closing an account doesn't make it disappear from your credit report.

A damaged credit history can be improved over time. Follow these steps to get your credit back on track:

1. Make a list of all the debts you owe, including creditor names and addresses.

2. Prepare a realistic budget.

3. If you're overdue on any bills, contact your creditors right away.

4. If you have savings, consider using it to pay as many bills as you can.

5. Be diligent about monitoring your credit report.

6. Consider selling some of your assets with cash value.

7. Consider getting a second job to pay off your debts.

8. Consider other sources of money, such as borrowing from your retirement account (as a last resort).

After completing these steps, there are still more things you can do.

Try to re-establish credit with former creditors. Contact former creditors with whom you had a good payment history. They may be willing to re-establish a credit relationship with you.

Consider offering security on a loan. Secured loans are tied to collateral, such as real estate or cars. Remember that if you default on a secured loan, your collateral may be repossessed.

Consider opening a secured credit card account. This credit is tied to a deposit in a bank account. You can charge up to the amount you deposit. Verify that the bank issues reports to the credit bureaus.

Open a co-signed credit account. A co-signer is a person who is willing to sign with you on a credit or loan application. In the event of nonpayment by you, the co-signer becomes responsible for the debt; both parties credit ratings are affected.

Don't open new credit accounts unless the terms are acceptable. Try to avoid "introductory" or "special offer" interest rates.

Don't be afraid to ask for help. Affordable financial advice is available. Above all, don't give up. Restoring your credit takes dedication, patience and time.

Source: www.freddiemac.com