Restoring Your Credit

It’s always in your best interest to improve your credit score.  The good news is that no credit score lasts forever - it changes over time, so you can improve it over time.

Every time you apply for a loan or credit card, use credit, or make or miss a payment, you build another entry in your credit report. You also raise or lower your credit score.

Here are ways you can improve your credit score over time:

• Stop spending money you don't have.
  If you have a budget, stick to it. If you don't have a budget, make one.
• Make at least the minimum payments, on time.
  This is something that can begin to improve your credit rating right away.
• Pay off your accounts.
  If you have several accounts with small balances, try to pay them off. If you have accounts that went to collection, pay them off as soon as possible!  But don’t use one credit card to pay off another.  That is just transferring debt, not reducing it.
• Limit your credit.
  It may be tempting to open a new account to pay off other accounts, but it is a dangerous trap that can cost you money and actually hurt your credit rather than help.
• Use bankruptcy as a last resort.
  Filing for bankruptcy can keep you from getting a loan for a long time, raise your interest rates, and stay on your credit record for 7 to 10 years.
• Get help from a credit counselor.
  Free and low-cost help is available.  The earlier you recognize a problem the easier it will be to fix it so don’t ignore the warning signs of financial and credit problems.

Fix errors on your credit report.

Sometimes, credit reporting agencies make mistakes that can damage your credit record, so it is important to check your credit report at least annually. If you see something wrong on your credit report, fix it immediately.