Rebuilding Credit

How to Start Rebuilding Credit

I started my own business 5 years ago and my credit has suffered terribly.

What is the best and quickest way to build up my credit score.

Thanks,

Jill

---

Is your credit bad because you are overusing it and approaching your credit limits: or is it bad because you have been skipping payments; or is due to a combination of both?

Many small business people find themselves with a cash flow problem and use whatever credit they can get their hands on to keep going. Even though you never miss a payment, your credit score falls and the dreaded “universal default” clause kicks in, jacking your interest rates on some accounts to 29 to 31%.

This, of course, just makes your cash flow problem worse.

Although it may be impractical in your situation, the only way to remedy this is to lessen your reliance on credit. Don’t apply for new credit and try to keep your balances at about 50% of your credit lines or less.

If you have been missing payments, you have to catch up with past due payments and keep current on future ones. Again try to lessen your reliance on credit and use as small a portion of your credit lines that you can.

In either event, a couple of years of good financial behavior should wipe out most of the negatives. The credit scoring system is weighted to reflect more current behavior, so that is what is going to count most to improving your credit.

  | Top | Questions | Credit Counseling | Home |