Rebuilding Credit

Applying to consolidate finances is a terrific way to begin rebuilding your credit, which has probably taken a hit as you've struggled to manage your debt. After you consolidate finances, though, you'll want to take additional steps to rehabilitate your credit history and maximize your credit score. Here are some tips to help you along the way.

• Apply for a secured credit card. If you cannot qualify for an unsecured card, a secured card is a good way to control your spending and to rebuild credit. When shopping for secured cards, make sure you select a card issuer who will report your payment activity to the credit bureaus. You also want to look for cards that eventually convert into unsecured cards after you make payments consistently for a certain period of time (usually a year).
• Keep your balance-to-limit ratio as low as possible. One of the biggest determinants of your credit score is your balance-to-limit ratio, or the amount of debt you carry compared to your credit limits, or capacity. The lower this ratio is, the better your score will be. Try to keep individual card balances to no more than 20% of your limits. Consumers who appear "maxed out" aren't as attractive to lenders.
• Get an installment loan. Creditors like to see that you can use many types of credit responsibly, so try to diversify your report as much as possible. One way to do this is to apply for an installment loan, such as a car loan or a home loan. If you pay responsibly on one of these loans consistently, it can significantly boost your credit.
• Think about credit counseling. When you consolidate finances through us, we will connect you with a non-profit who can help you better manage your finances. They can give you advice, help you start a budget, and even negotiate with your creditors for you. Credit counseling services are also available to do this. Credit counseling services are available in most areas for very reasonable costs, so you might want to consider it.

Check out our home page for more on how we can help you consolidate finances.

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