Guide to Restoring Credit Quickly

If you�re in the market for mortgage loans, then you probably already know just how important your credit score is. Not only will it play a significant role in determining whether or not you get approved, it can also have a dramatic effect on your interest rate. Those with less than stellar credit tend to get stuck with higher interest rates and less favorable loan terms. However, that doesn�t mean you can�t restore your credit before applying. Here�s a look at some simple tips that can help you restore credit quickly:

• Improve Your Debt to Credit Ratio - Do you have several credit cards that are at or nearly at your available credit limit? Even if you have a good payment history, these cards could be hurting your credit score. That�s because your overall debt to available credit ratio plays a big role in determining your score. Improve your ratio and you could see your credit score go up in a hurry.

• Check Your Credit Report - It�s estimated that nearly half of all consumer credit reports contain mistakes. Those mistakes could be hurting your credit score without you even realizing it. Fortunately, you can get a free copy of your credit report from any of the major credit reporting agencies online. Since it�s free, checking your credit report is definitely worth your time, even if you don�t think it contains any errors.

• Use Cash - We all know how convenient it is to use debit and credit cards instead of cash these days. However, more than a few studies show a clear correlation between overspending and carrying plastic. Many people have found that only carrying cash allows them to avoid taking on new forms of debt. Try for yourself and put any extra savings toward paying off debt.

• Pay on Time - One of the easiest ways to damage your credit score is to make late payments on debt. Do whatever it takes to ensure that your payments are made on time each month and you could see steady improvement in your score. Sign up for e-mail reminders or automatic payment services if you�re the forgetful type.

• Avoid New Lines of Credit - During this time, you may be tempted to open up a new credit card or take out another loan. However, unless it�s completely unavoidable, don�t do it. Just applying for a new line of credit can hurt your score, so focus on the debt you�ve already accumulated first and foremost. Once you�ve improved your debt situation and restored credit, you�ll find that opening a new line of credit is much easier.

• Don�t Declare Bankruptcy - If you�re serious about getting good rates on mortgage loans, then you know that you can�t afford to declare bankruptcy. By declaring bankruptcy, you all but surrender any chance of getting a decent loan rate in the near future. Bankruptcy absolutely ruins your credit score and you�ll feel the negative effects of it for years to come.