How to restore or improve a credit rating in the USA

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There is no universal recipe for restoring a credit rating, the duration of this process and the steps that need to be taken will depend on each specific case. Of course, to correct the consequences of a couple of overdue payments is much easier than to restore the reputation of a borrower who has huge debts, payments for which have not been made over the years.

In any case, be prepared that the process of restoring your credit rating can take from a few months to a couple of years.

Edition Go Banking Rates gathered 5 basic steps that will help restore creditor confidence and improve the borrower's credit rating.

1. Get rid of late payments

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The presence of even one small overdue payment adversely affects your credit history and rating, so if you decide to improve it, all debts and delays need to be repaid, well, of course, not to make new ones.

2. Reduce your credit utilization rate

Фото: Depositphotos

Credit utilization ratio is the ratio of the portion of credit you have used to the total limit on the card. If it is too high, it will negatively affect your rating, so it is advisable to pay off some of the debt. The ideal option for getting a good rating is to pay off your credit card debt in full every month, that is, pay off in the next month the amount you borrowed in the previous month.

3. Take a loan to restore the credit rating

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Some banks and credit communities offer a loan, the purpose of which is to form a high credit rating or to restore it. If you choose this option, the payment of contributions on time will become a key factor on which the restoration of your rating will depend. In such loans there is one trick: in order to protect the interests of the lender, you will not receive the borrowed money until you repay the loan in full.

For example, Republic Bank in the USA offers this type of loan in the amount from $ 500 to $ 1500 for the period from 12 to 24 months. The bank sends the money borrowed to you for a special deposit, which you cannot use until you have repaid the entire loan, after which you are free to manage the money.

4. Get a secure credit card

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The idea behind this card is the same as the credit rating restoration loan. The holder of this card deposits money into a secure account - you get access to this money depending on your income level and the ability to restore withdrawn funds.

This card can be used to pay like a regular credit card, but it is worth considering that this is not a typical prepaid credit card - if you are late with any payment on this card, the bank reserves the right not to return the funds already deposited to you. But if you complete the task successfully, it will improve your credit rating and you will be able to fully manage the money you deposited.

5. Do not apply for new loans too often

Фото: Depositphotos

Your credit history stores data on every loan application, and if you make them too often, it's a signal that you can't live within your means and want to take on more debt. Instead, it's better to demonstrate your financial responsibility for the loans you already have.

Any new loan, even if you are given it, will lower your credit rating.

Read also on ForumDaily:

How to check your credit rating

How Mortgage Affects US Credit Rating

How to get the perfect credit rating

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