Restoring Your Credit

If you would like to improve your credit score, don't worry. No credit score lasts forever - it changes over time, so you can improve it over time.

Every time you apply for a loan or credit card, use credit, or make or miss a payment, you build another entry in your credit report. You also raise or lower your credit score.

Here are ways you can improve your credit score over time:

• Stop spending money you don't have.
  If you have a budget, stick to it. If you don't have a budget [PDF 73K], make one.

• Make the minimum payments, on time.
  You can begin to improve your credit rating right away by making at least the minimum payment, on time.

• Pay off your accounts.
  If you have several accounts with small balances, try to pay them off. If you have accounts that went to collection, pay them off as soon as possible!

• Limit your credit.
  It may be tempting to open a new account to pay off other accounts, but it is a dangerous trap that can cost you money and actually hurt your credit rather than help.

• Use bankruptcy as a last resort.
  Filing for bankruptcy can keep you from getting a loan for a long time, raise your interest rates, and stay on your credit record for 7 to 10 years.

• Get help from a credit counselor.
  Free and low-cost help is available.

Fix errors on your credit report.

Sometimes, credit reporting agencies make mistakes that can damage your credit record, so it is important to check your credit report at least annually. If you see something wrong on your credit report, fix it immediately.