There are a few simple steps you can take to rebuild your credit scores. They are:
- Be sure to pay your bills on time.
- Work to pay down your current debt.
- Do not incur any new debt.
- Do not close out any credit cards.
- Keep your credit balances low.
First, be sure to pay every debt on time. Create a time each month or twice a month, if needed, to sit down and pay your bills. Note the time each is due and allow time for delivery if you opt to mail the payments. Paying on time will result in higher credit scores.
Second, focus on paying off your debt. Try to pay more than just the minimum required amount each month to reduce the debt quicker.
This third step is pretty self explanatory. You do not want to incur any new debt while working to increase your credit scores. New debt will lower your credit scores.
Fourth, do not close out any existing credit cards. Doing so will result in a drop in your credit scores.
Finally, do not allow the amount of money you owe on any credit card to go beyond 30% of the credit limit you have with the credit card carrier. This figure of 30% should be the maximum amount you ever borrow. Any amount over that may cause your credit scores to lower or keep them from moving up.
I have seen, through experience, borrowers credit scores drop fifty points when they have taken advantage of a zero percent credit card offer while in the middle of a mortgage application. In their minds they thought the action would lower the monthly payment thus make their finances look more attractive to the lender. Just the opposite happened. Credit scores dropped and it ended up costing my customers more money in the end because they had to use another loan product that carried a higher interest rate.
It really does pay to have good credit.