Rebuilding Your Credit Report – Part II

Close Accounts You’re Not Using

Before you apply for an important mortgage or car loan, you’ll want to close dormant accounts. Be careful, though, not to do it too quickly. If you close them all at once, your new lender might assume you’ve hit the financial skids. Close one or two a month (including department store cards) until you’ve closed them all.

Don’t Hit All Your Credit Limits

First, make sure that your total credit limit (not including your mortgage, of course) is less than your annual income.

Next, see how much debt you have outstanding. If you’re using 80 percent or more of the credit you have available, it’s a sign to lenders that you’re stretched. In that case, it pays to sign up for another card or ask to have your limits raised on your existing ones.

As long as you don’t tap that larger reservoir, having the additional credit available should help bring your balance back into the acceptable range. Try to keep credit card balances low on all of your credit lines.

Your thoughts on this subject? Your comments appreciated!

Content © Rich Brott, 2011

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