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Different Ways to Rebuild Credit

With a sluggish economy and many high school and college graduates unable to find jobs, many Americans these days are suffering from poor credit. But a low credit score does not have to be taken for granted. Credit scores can change! Here are a few things you can do to start improving your credit score.

Pay your bills on time

Yes, it’s easier said than done for a lot of people, but if you can, really make an effort to pay your bills on time. Enroll in autopay, remind yourself on your Google calendar, do whatever you have to do to start making payments on time. Your payment history accounts for 35% of your credit score, which is the biggest contributor out of everything that is considered when developing your score. The sooner you start making payments on time, the sooner you can reap the rewards.

Cut down your debt

Again, possibly not the easiest thing for a lot of Americans right now, but you need to do whatever you can to lower your debt. If all of your credit cards are maxed out, that’s not a good sign to lenders because they want to see that you have the ability to repay your debts. Get rid of cable, stop eating out multiple nights a week, and stop going shopping when you’re bored. Instead, get yourself a library card and figure out ways you can change your spending habits. Throw any extra money you build up at your debts. Your credit score will grow, and you’ll be happier around bill time.

Keep those old credit cards open

It may seem counterproductive, but use your old credit cards once in awhile to keep them active — making sure you repay them at the end of the month. The longer a credit card has been open, the more it helps your score.

Make sure you have a healthy mix of credit

Though it’s a small percentage, credit diversity does help your credit score. But don’t think that having different kinds of credit cards is enough — installment loans can help. That said, improving this one takes time. Don’t go out and start taking loans out just so you can say you have them.

Only open new lines of credit as needed

Having a lot of new credit lines can be a red flag to credit bureaus. It suggests to them and lenders that you’re running into difficult times and aren’t making enough money to cover your expenses. Open only what you need when you need it!

Writer

Lauren Ward is a widely featured author with her work gaining a presence on top media outlets like Huffington Post, Kiplinger, and CBS News. She has been in the content writing business for almost a decade (9 years of experience and counting) and writes attention-grabbing content focusing on real estate, lending, and personal finance. She has worked with various national non-profit organizations and at Federal Reserve Bank of Richmond. Read more >

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