Regardless of how your credit score has been damaged, it is imperative that you begin to takes steps to rebuild it. Without a good credit score, your loan applications will be rejected, you’ll pay higher mortgage rates, and you may even have difficulty finding housing. Here are some steps you can take to rebuild a damaged credit score.

Know What Affects Your Score

To be able to repair your credit score, you need to know what factors are involved in calculating it. For instance, it is important that you make payments on time, maintain a low debt-to-income ratio, have a balanced mix of credit, and take on a limited amount of new credit. Be sure to monitor your credit score annually, and also look for errors on your report that you can have corrected.

Make Payments on Time

One of the most important factors in rebuilding your credit score is improving your payment history. To be sure that you make all your payments on time, set up automated notices so that you receive reminders when payments are coming up.

Pay Off Your Debts

Besides making current payments on time, it is important to reduce the debt you have already accumulated. As a start, consolidating the debt may help to lower the monthly payments. Otherwise, focus on paying off your high-interest debts first, and then work on the others. Attempt to negotiate interest rates with lenders. Make a budget for your expenses that includes payment of debts, and stick to it. If necessary, find a source of extra income that will help you pay off your debts faster.

Don’t Take on New Debt

Since account history is a factor in your credit score, keep the accounts you already have open. However, try to avoid opening any new credit accounts or taking on any new debt.

Form Better Habits

Once you have reduced or eliminated your debt, work on establishing better long-term financial habits. These should include paying bills on time, keeping aside some funds for emergencies, and periodically checking your credit score.

For more advice on improving your credit score, contact Commercial Capital Finance.