Prior to filing bankruptcy, a person's biggest concern is their debt. But after bankruptcy, their attention quickly - and legitimately - turns to rebuilding their credit score. Some strategies are relatively obvious, while others are not quite as intuitive. To help, the folks over at Experian have identified five particularly useful tips to improve your credit report. Here they are:
1. Make good credit a habit for the long-term. The longer an account is open and active with an on-time payment history, the more it shows you are a good credit risk.
2. Keep your utilization rate low. To calculate your balance-to-limit ratio, divide the balance by the credit limit for that account. To calculate your total utilization compare your total balances to your total limits.
A high utilization rate is a sign that you may be experiencing financial difficulty and is a strong indicator of lending risk. As a result, high utilization hurts credit scores and can cause lenders to be reluctant to extend additional credit.
3. Limit the number of inquiries. An inquiry is a record that your credit report was accessed in response to an application you submitted. Inquiries provide insight into your financial situation that the rest of the report may not.
The primary reason inquiries influence credit scores is that they indicate you may have acquired new debt that does not yet appear on your report. Additionally, multiple applications within a short period of time may be a sign that you are having financial difficulties and are seeking credit to stay afloat, or to live beyond your means.
Lenders want to be sure you are not in danger of over extending yourself before agreeing to extend additional credit.
4. Keep balances low on credit cards and other “revolving credit.” High outstanding debt can affect a credit score.
5. Pay your bills on time. Delinquent payments and collections can have a major negative impact on a credit score.
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