- 1). Review the balances on your credit card and other revolving credit accounts. Creditors like to see you using only a small portion of your available credit on each account. MSN Money recommends that you use no more than 30 percent of your available credit. Spending more than that is a warning sign, the site says.
- 2). Check your credit score. Credit scores range from 300 to 850, according to the City of Phoenix. Scores of 700 and up are considered excellent. Scores that continue to drop or are below 600 are cause for concern. The problems should be obvious on your credit report, which could list late payments, delinquent accounts that have been assigned to debt collection agencies and other issues. Order your credit report for free from Annual Credit Report (see Resources). You are entitled to three free credit reports every 12 months under the terms of the Fair Credit Reporting Act.
- 3). Review correspondence you have received from current and potential creditors. The Fair Credit Reporting Act requires creditors to tell you why you have been denied credit. You may have been denied credit because the creditor noticed several of your accounts had been turned over to debt collection agencies because you stopped making payments, or because of a tax lien. Current creditors may have been calling about the status of your account after a missed payment---more signs of credit problems.
- 4). Seek impartial advice by meeting with a credit counselor. A nonprofit credit counselor can review your credit report and immediately spot trouble signs. Find a credit counselor in your area by asking for a referral from your bank or credit union.
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