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Rebuilding Your Credit

On Behalf of | Jan 18, 2012 | Consumer Protection

If you have had a rough couple of years financially, and
weathered the storm, now is time to rebuild your credit.  How
can you rebuild their credit after having had multiple
delinquencies?  The first rule is that it takes some
time.  There is no special formula that can restore your
credit overnight. In order to restore your credit, consider the
major credit score factors; timeliness of payments, average daily
balance across trade lines, debt to available credit ratio, history
of credit, and types of credit used.  Focus on those factors
and restore your credit in a long lasting manner.

Timeliness of Payments:  Obviously, if you
don’t pay on time, it will hurt your score.  This is true for
a simple missed payment that was only days past the deadline. 
The more recent the late payment, the more it will affect your
score.  Take the time to make sure your bills are all in order
and set to be paid in a timely manner so the creditor
and record it before the late date.  If you can
pay your bills, but are not paying them on time, then the problem
is in organizing and scheduling.

Average Daily Balance / Debt
to Available Credit Ratio:
  Even if you may make every
payment on time, your credit score can still suffer if you are
using up your available credit.  High balances and maxed out
cards are just as harmful as missing a payment.  If your
credit report always shows balances, and those balances are close
to the amount of the credit lines, then your score drops. 
Whenever possible, pay down balances and don’t add to them by spend
unnecessarily.  Sending minimum monthly payments on time may
be great for the timeliness aspect of your score but will not do
anything for your balances.

of Credit:
  The longer you display a positive credit
history, the higher your score.  If you are new to having
credit and have had limited accounts for limited years, you will
have a lower score.  For some, credit restoration is just a
matter of time.  If you are new to having credit accounts,
then you are in the best possible position to build a strong credit
background by slowly adding accounts, maintaining low balances, and
paying on time.  It is also important how long accounts have
been open.  If you recently opened accounts, your score drops
until you show that you can maintain those accounts for a period of
time.  Newly purchased homes or cars can slow down your
ability to make large purchases on credit in the immediate

Type of Credit: A smaller portion of your score considers the
type and prevalence of the credit you use.  Your credit can be
affected by an abundance of store cards or revolving debt as
compared to installment loans.  Maintaining a proper balance
by not opening too many store cards will help increase your

Keep in mind that all of these factors will help you slowly
restore your credit to a stronger standing on a more long term
basis.  Still, the credit bureaus reporting this information
must report your credit accurately.  If late payments are
being reported that did not happen, or if creditors are not
updating your balances, you have rights under the Fair Credit
Reporting Act.  Contact SmithMarco, P.C.,
for a free consultation to assist you in maintaining a credit
report with maximum possible accuracy.