A bad credit rating will tarnish your credit history that would make credit approval difficult when you apply for a loan. Your credit rating actually serves as a scorecard for approval of your loans or mortgages, examples will be debit and credit cards, car loans, insurance, cell phone loans and other forms of loans. Think about it. Maintaining a bad credit record disqualifies you for a better opportunity with a new loan. Whether you like it or not, that is how the credit business goes. Any late payments, outstanding balances and other financial statements will be reflected in your credit history for seven years, quite some time to haunt your credit record.

But here’s the good news, there are many ways to reconstruct your bad credit rating. It is possible due to the numerous credit companies opening for business, the competition is very active that some credit provider might take your rating into consideration even if it is a little way off.

The first thing to do is to understand your credit rating. You may order a report from one of the top credit reporting bureaus (Equifax, Experion and Trans Union). It is preferable to get one report from each bureau as they may slightly vary with their reports. Among U.S. citizens, a new federal law entitles every American citizen to one free credit report annually but the request should be initiated by those who want a copy of their credit report and not by the credit bureaus.

Scrutinize your credit report very well for some errors as research statistics show that almost every single consumer can find some error in at least one of their credit bureau reports. Make double effort to make the necessary correction as even a slight error can significantly affect your credit score. Never leave this correction process the responsibility of the reporting credit bureau as they seldom bother to verify and countercheck information.

When you seem to run low of funds to pay your debts in full, try to negotiate with the lending company to lower your interest rates on minimum monthly dues. Try anything negotiable to reduce your rate in order to cope with the monthly payments. Being able to pay on time is one of the stepping stone of rebuilding your credit report.

You can manage to maintain a good credit rating by limiting the number of credit cards you own. Overextending your credit with so many credit cards is not helpful to your credit rating and it will cause you to be in too much debt. You can also establish a good credit standing when you pay your dues on time or at least paying a little more than your minimum monthly dues. As much as possible, use your credit only on your immediate needs. This will help reduce the mounting balances on your account. With discipline and consistence in payment, you are on your way to rocket up your credit standing into a spotless credit rating.