10 Tips for Rebuilding Credit

April 13, 2014 by Sana Yasin

First thing first, your credit rating needs to be positive! But what good is a positive credit rating? Your credit rating is the only thing that creates a long term relationship between you and your lender. It helps you obtain credit on suitable terms and condition. If you are a risky borrower then you will face difficulty in finding a lender of good reputation and secondly you will get loan at higher interest rate.

At this point a question might come to your mind “What can I do to improve my credit scores?” Here are ten tips to how you can improve your credit rating.

1 –Analyze your credit report.


 Your credit report contains all the information on your credit history, whether sued or faced bankruptcy. Any lender would read that information very keenly before giving you an advance. So, it’s very important to check your credit report. Any errors or miscalculations can put a bad impact on your lender. Errors may result due to following reasons:

It’s important that you inform the credit bureau about the information you find inaccurate. Identify the errors and explain the reasons for those errors. Finally, request the bureau about the correction or deletion of those errors.

2- Follow the budget.

You can’t get good credit score if your expenses are more than your earnings. Create a spending plan. Here are some tips that can help you develop a good spending plan:

3- Know your credit limits.

Don’t borrow too much that can lead to a situation where you can’t pay it back. Here are some factors to be considered:

4- Follow Your Payment Schedule.

Paying in time for all your credit card as well as utility bills will give a strong foundation to a good credit score. Here are some tips for that:

5- Negotiate with your lender.


Bargain with your debt collector about settlement of your debts. Get in writing whether you are going to pay in full or settle the remaining balance for less than full amount. This step will not immediately affect your credit scores but it will make you stop worrying about your debt.

 6- Choose Secured Cards or small loans.


These are easy to get as they are backed by the security deposit. When you will close the accounts you will get the amount back, so it is important to manage these accounts carefully. However, there are some other factors to consider:

7-Beware of your finance charges.

Avoid unnecessary charges on your credit cards. Use the credit card in case of need and make sure you can pay it back. Keep some balance left in your account to make sure that account information is reported accurately to the bureau agencies.

8-Improve your collateral.

Lenders calculate your net worth by calculating your assets and liabilities. In case you don’t pay the credit amount back, the lender will recover that sum from your security deposits. You will get good credit at lower interest rate if your net worth is positive. Your car, house or the saving account is the thing that the lender can demand as collateral. Accurately determine the value of your collateral, especially buildings and plots. The value of real estate is usually considered more than the value of cars or vehicles.

9- Remove tax lien.

It is another way to build good credit. Tax lien is a governmental tax against your assets, if you do not settle your debts. If there is a tax lien on your credit due to some tax debt, it is important to remove it from your reports. If you remove this lien your credit score will improve quite significantly.

10- Be positive and be careful.

After facing credit problems you may not be availing credit again. But be cautious   and careful not getting into overheads again. Look into some factors before availing credit: