Improving Credit

Once you have taken the necessary steps to clean up your credit report, the next step is to improve your credit. Improving your credit profile requires a good faith effort and can take up to two years to substantially increase credit scores.

The best thing you can do to improve your credit is to stay current on all of your monthly debt payments. If you are habitually late on payments, particularly mortgage payments, lenders question your ability to handle your debt and are assuming more risk to lend you money. Another way to improve credit is by closing some of your credit accounts. Trade line or credit accounts are money you have the potential to spend. A large number of trade lines with high credit limits open reflects negatively on your credit profile. In general, it is good to have 2-3 major credit card or department store accounts open.

If past credit accounts have gone to collection or you have closed credit accounts with negative marks on your profile, you need to begin rebuilding your profile. You can begin re-establishing your credit report by applying for secured or low-balance credit cards to establish yourself as a responsible consumer, or by opening a checking or savings account (if you don't currently have one). It is also good to keep balances on credit accounts below 50% of the total available credit limit. Making purchases with credit and paying them off monthly is a great way to establish and better your credit profile.