rebuild credit score

Credit Score Basics

Credit scoring translates the information on your credit report into a numeric score, which makes it easier for a lender to evaluate your credit. The FICO score is one popular scoring method. Its scale runs from 300 to 850. The vast majority of people will have scores between 600 and 800. A score of 720 or higher will get you the most favorable interest rates on a mortgage

Credit scores are developed by comparing credit reports from millions of consumers over time, and identifying factors that tend to predict how well people manage credit later on. Those factors include:
* Payment history. Whether you've made payments on time in the past is used to predict how likely you are to pay in the future.
* Outstanding balances. Being over-extended on your credit accounts tends to lower your score. * Length of your credit history. Credit scores reflect payment patterns over time, so having a longer history gives lenders a more reliable picture of your credit.
* Types of credit in use. Having a diverse mix of account types usually has a positive affect on your score.
* New credit. A series of requests for new credit may suggest to lenders that you are looking to take on new debt. Because people tend to shop around for mortgages and other loans, all credit applications within a 14-day period are counted as a single request.

Rebuild Credit Score Strategy

Pay bills on time. make sure that you pay each and every bill on time. Even if you're paying just the minimum amounts due (more than the minimum is strongly recommended), pay those at least, and pay them a few days ahead of time for safety's sake.

Pay down your balances. Naturally, if you have several credit cards and they're all charged up to their limits, it will make other potential lenders uneasy, and consequently be reflected in your credit score. You can counteract this – and improve your score – by paying down the balances on your credit cards and other accounts.

Avoid new credit. don't apply for more credit cards than you need – even if they dangle that free toaster in front of you just for filling out the credit application.