The basics about rebuilding a credit score

Whether a consumer defaulted on a large sum of credit card debt or missed a few payments, his or her credit score likely took a hit.

With a poor score, it can be difficult to do many things, such as take out a student loan or purchase a car, which is why it is important to rebuild as soon as possible. Here are some of the basic moves that any consumer can make when attempting to better a credit score after a misstep. 

No. 1 – Get a copy of your credit report

The first step that needs to be taken is to obtain a copy of a credit report.

All three of the major credit bureaus can provide this document, and every consumer is entitled to one free copy from each annually.

Using this report, people are able to see exactly what is bringing down their credit score. For example, if there are any errors they can be viewed once Experian, Equifax or TransUnion sends a copy of the report. 

No. 2 – Pay down your credit card debt

Oftentimes, consumers who have poor credit scores also carry high balances. That being said, to improve their score, it would be wise to pay down this debt. However, that isn't possible for some people who find themselves in financial trouble. For these consumers, visiting with a credit counseling agency might be a good move, as experts may be able to provide a good plan for attacking balances.

No. 3 – Don't automatically close your credit cards

After paying down credit card balances, many people take the next step and close them. While this can certainly prevent them from getting deep into debt again, people should think twice before making this move. Credit scores are partially calculated based on the amount of available credit a person has, and eliminating cards brings this number down, which could hurt a score. Instead of cutting cards up, it might be a good idea to stash them away until their financial situation has improved. 

No. 4 – Consider obtaining a secured credit card

In some cases, people may struggle to obtain credit after seeing their scores fall, which is why getting a secured card could be a good move. Consumers are required to provide a security deposit to obtain a line of credit, which means there isn't much risk of high debt balances. However, positive information is reported to bureaus as if they were using a credit card. 

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