Do you need to rebuild a low credit score? Using a credit card such as  secured or unsecured Visa or Mastercard is an excellent way to improve your credit score.

Having bad credit should not prevent you from achieving your financial goals. Credit bureaus insist that if you make mistakes that you will have bad credit for at least the next seven years.

This simply is not true.

By way of background, lenders look at your history to determine if you are reliable and can make the monthly payments.

Among other things, they consider your your income to debt ratio, a method that calculates how much debt you can afford to pay.  How much you earn versus how much you owe, including the amount you want to borrow, are figured into this formula.

If you don’t have credit at all, it may seem just as bad.  Lenders will rank you at a lower credit rating to start, simply because they don’t have a baseline to work from.  So start slowly to create one.

Apply for a credit card or line of credit with your bank or credit union, with a small amount of credit, such as $300.  Buy something but pay it off right away, before the due date.  Doing this consistently will give you a reliable and consistent credit history.

Some experts will tell you to keep a small balance on the credit card. Even though you will pay a modest amount of interest, it will help boost your credit score even quicker. (The goal here is to increase your credit score so you can expect there to be some expenses to achieve that goal.)

Each month you should do one other thing to actively improve your credit score.

For example, you can monitor your credit report for any inaccuracies or errors.  It is very important to look for any mistakes because it take anywhere from a month to a year to remove an inaccurate reporting.   File disputes immediately to begin the required investigations to get the information corrected.

Contact the Lexington Law Firm with any questions you have regarding improving your bad credit score. The attorneys and paralegals helped us fix our bad credit and get approved for an amazing new home.

This entry was posted on Tuesday, May 11th, 2010 at 10:51 am and is filed under credit strategies. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.