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Bad credit score? Here's how to fix it

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If a person gets turned down, how long should he or she wait before applying for another card again?

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Well, they should definitely give it a lot of thought. There's no particular amount of time and the score does not penalize you for being turned down. It doesn't know if you've been turned down. But you're going to have an inquiry from that one that was turned down, so that's one more than you probably want to have. In terms of how long you should wait, as long as you have one account -- like for this person that's getting back into the credit world -- if you can live with the limit that you have on that one account, I would say, ideally wait a year before opening another one, six months minimum. I would definitely wait six months, keeping in mind that inquiries only are looked at by the score for one year.

I don't want to make too big a deal about inquiries, but when you have a very thin file, there's not a lot on there and those can kind of take on larger proportions.

Getting back to the guy or the gal that's re-establishing after all these years, in the short term, opening a few accounts is probably going to do him (or her) more good than harm.

With so many homeowners having difficulties with their mortgage payments, we've had questions about the credit score and foreclosure. How many points will your credit score go down if you have a foreclosure? How much if you sell your house in a short sale?

This gets into one of those "it varies" answers. No. 1, it's going to depend on where your score was before the foreclosure or the short sale because if you already had a lot of late payments on it, it's not going to fall as far, because it doesn't have as far to fall. If you had pristine credit and then you have that on your file all of a sudden, your score will easily drop more than 100 points, probably quite a bit more. But then that all depends, too, on your credit card balances, your length of history and all that stuff.

The idea here is how far does it have to fall? In terms of foreclosure vs. short sale, they are treated the same by the score. There really is no difference. So, what I'm saying about one will apply to the other.

If you're interested in how long it takes to recover from that, then the thing to be aware of is the date or how recently that short sale or foreclosure took place and to what extent are there any other negatives on your credit file. If you were, say, up to date on all your credit cards and your auto loan when they reported the foreclosure or short sale, it's going to take less time to recover, which would be somewhere between two and four years if you kept everything up to date and kept your balances low and did that kind of thing.

What matters most in those cases is how long since that event took place, more so than how many dollars were involved -- whether you foreclosed on a half-a-million-dollar home or $200,000 mortgage does not really come into it so much, but it's mostly how long ago it was.'s corrections policy -- Posted: April 7, 2008
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