To be able to repair & rebuild your credit, you must 1st face any fear you might have about reading your credit report. Many people look at their report and freak out at the mysterious codes and technical jargon. Although this can seem overwhelming, what matters are 5 simple factors.

  1. Type of Debt. Cetain kinds of debt always hurt your credit score. Collection companies, debts that have been assigned by the original creditors, and public records (such as lawsuits and liens) are always a negative factor on your credit score.

  2. Late payments. Late payments will substantially reduce your credit score, and can continue to hurt you for years.

  3. Ratio of Debt to available credit. Keep the amount of debt you have to the amount of credit that you have available low to improve your credit score. If you owe $10,000 on an account & your credit limit is $10,000, your ratio of debt to available credit is 100% - not good! To have a good credit score, your ratio should be right around 30% or less. So if your available credit is $10,000, you should owe no more than $3,000. Your ratio of debt to available credit takes all of your available credit and compares it to all of your debt. So if you have an open account with a $0 balance, it will actually help your credit score.

  4. Length of Credit History. The longer your credit has been on the credit reporting radar, the better. If you have had credit for only a short period of time, your credit score will suffer.

  5. Credit Inquiries. Credit inquiries hurt your credit. A credit inquiry happens when you apply for credit and damages your credit score for a short time. It is especially bad to have several inquiries over a short period of time. Someone applying for credit from many sources looks like someone desperate to borrow, or someone who has been turned down repeatedly. As a result, applying for credit from several sources over a short period of time lowers your credit score.