The credit score is a short three-digit number with a very high impact. The purchase of a home, obtaining an auto loan or other important financial milestones are all dependent on this carefully calculated measurement. But at times, we stumble financially, and our credit scores are adversely affected, leaving us to wonder, “What can I do now?”.

The good news is that you can rebuild your credit score, regardless of your situation, but it takes time.

Here are four areas to focus on that make a high impact.

Even if you’ve filed for bankruptcy, eventually creditors will offer you accounts again. It usually starts with a prepaid account, and once you pay that on time, they’ll offer an unsecured credit card. Once you start using credit again, though, keep your balances low.

One of the major factors in your credit score is how much revolving credit you have versus how much you’re using. Keep the amount you’re using to 30 percent or less. For example, let’s say you have a $1,000 limit. Don’t use more than $300 at a time.

When you apply for credit, it may cause a small dip in your credit rating. With the exception of certain types of loans, such as mortgages and auto loans, don’t apply for multiple accounts at one time. For example, if you’re shopping for a credit card, avoid applying for multiple cards (especially if you’re testing the waters to see who will approve you).

This might seem intuitive, but it’s a large part of your credit score so it’s worth noting. Your payment history has a 35 percent impact on your FICO score calculation. So even if you’ve paid bills late in the past, if you start making consistent on-time payments, eventually your credit score will improve.

If you are having trouble making a payment on time, contact your creditor right away and make arrangements. Doing so could prevent an adverse mark on your report.

Closing old accounts is tempting. After all, you aren’t using them anymore, so why bother keeping them open? But the amount of time that an account is open weighs into your credit score. Accounts that are open longer are favorable, so avoid using those old accounts, but keep them open.

Check Your Credit Report Annually

You can get a free credit report online each year. As you raise your credit score and improve your rating, it’s important to review the report annually. Look for errors — accounts that don’t belong to you, inaccurate reports of late payments and other issues. You can then correct these errors so they don’t have an impact on your ability to secure credit in the future.

Be Patient and Persistent

Credit score improvement is a slow and steady process. Continue to work on it diligently each month. The work pays off, with not only an easier time securing credit but also an overall lower cost.

If you have questions or would like more information, please contact us at 914-946-2889 for a free consultation.

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