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Credit Restoration: Tips for Improving Your Credit Score

If you need to raise your credit score, understanding how credit restoration works can help you achieve your goal and increase your credit score far more quickly. Credit repair isn’t an impossible goal. You can raise your credit score by minimizing the impact of late payments on your credit and letting large credit limits work to your advantage. Still, you will want to make sure you take the right approach toward improving your credit score. It won’t happen overnight, but it is possible.

Did you know that you can raise your FICO score if you don’t try quick fixes, but instead make a resolve to change behavior and make some wise credit decisions like paying your bills on time.

Timing of your payments is one of the factors that most influences your credit score. If you’ve missed many payments, or been more than thirty days late on a payment, it’s very important to get current on your payments and stay that way. This is because recent payment history ? usually for about the last two years ? has the most impact on your credit. So start fresh now on your way to credit restoration. Another thing to consider is that if you have missed payments but didn’t realize it, or if any of your accounts have gone to collections, this will stay on your report for up to seven years. This is why it’s so vitally important to pay on time.

It is much easier to avoid credit repair issues if you have kept your debt balances low. Not only will this benefit you but it will save you time when trying to clean up credit repair issues later. Try to keep your outstanding debt below 50 % and ideally at 10-20% of your available limit. By keeping these balances low you are actually raising your credit score.

Considering this guideline, it is sometimes necessary to apply for a new line of credit to increase your overall credit limit and lower the ratio of your debt to available credit. If you don’t qualify for unsecured credit, you can even open a secured line. This may seem counterintuitive, since your goal is probably to get out of debt, not acquire more. But low balances compared to overall credit limit are important for raising your credit score. On the other hand, if you have a hard time controlling your spending, you may not want to open a new account as part of your credit restoration strategy. Take a good hard look at your spending history to see if you can handle this kind of risk.

Part of the reason you don’t want to open an account just as a quick fix is that your average account age will get lowered. Creditors look at the length of time you have been managing credit accounts, and rapid account buildup (opening up several accounts close together) will make you a credit risk, since you will seem like a new and inexperienced user. By having too many open accounts, creditors may think that you will not be able to pay them if you decide to max out your accounts, depending on the type of credit your trying for.

So, it’s usually best to apply only for credit that you really need. Make sure to use a few different types of credit products too, and don’t have too many revolving credit cards. For example, it’s fine to have a credit card or two, plus a student loan and an auto loan. This way, creditors can see that you are able to make consistent payments on installment loans, and at the same time manage revolving credit responsibly.

If you need credit restoration because of prior credit mistakes, don’t let it overwhelm you. Now that you have tools and strategies to repair your credit, you’re ready to start on the path to improving your credit score. You can also take advantage of the many wonderful resources out there to help you increase your credit score.

Whether you work with credit repair agencies or work on your own credit restoration, you’ll find that you begin receiving premium offers of credit once you’ve built a consistent payment history. And, better credit offers will allow you to keep more of your money instead of spending it on high interest rates. This will provide you with the financial freedom to spend your money on the things you really want and need. In the end, you are the ultimate winner if you work toward credit restoration.

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