Where to Start

First, you should get a copy of your credit report. You can request one of from each credit bureau for free once a year at Annualcreditreport.com. These will include your report from Experian, Equifax, and Trans Union. This report will not have your score but will give you detailed information of what is on your report. It is very important to look at all of them over for errors. All 3 reports are not the same so take the time to go through them. If you do find errors now is the time to dispute them.

Improving Your Credit Score

Do you know how your credit score is determined? There are 5 categories that make up your score:

35% Payment History

30% Credit Usage

15% Credit Age

10% Account mix

10% Credit Inquires

Payment History

The largest factor is your payment history. This is you making your payments and hopefully on time. If you have trouble with this it is time to implement some ways to improve paying on time. Write your due dates on a calendar. Set reminders in your phone to pay the bill before it is due. This little change will boost your credit score.

Credit Usage

Your credit usage is the amount you charge compared to the limit on your card. Ideally, you do not want to charge more than 30% on a card. If you have a $1000 limit do not charge more than $300. 30% is the maximum you do not want to go over, but keeping a lower percentage will help your credit improve even more.

Age of Credit

Credit Age is the length you have had credit. The longer your credit history the more loyal you seem to lenders. Having an average age of 5 or more years is best. This is the reason some people may tell you not to cancel older cards that you are not using. It helps your credit to keep your longer cards active. Some credit lenders, such as department stores, will cancel your account if you have not used it in a while. To prevent this, use your card once every 6 months or so and pay off the balance.

Types of Credit

Credit Mix is all about having different kinds of credit such as credit cards, car loans, mortgage, personal loans and such. Now don’t go out and buy a new car just to have a car loan! But don’t rely solely on credit cards. Lenders like to see variety.

Credit Checks

Lastly, a large impact on your score is credit inquiries. This is why it is important not to apply for every form of credit that comes to you. A lot of credit card applications can come across that you are having a hard time with money and need to rely on credit. These inquire also stay on your credit report for a full year. Rethink how badly you need something before applying!

Dealing with Collections

Do you already have some accounts in collections or on their way. Read my post on Conquering Collections for some advice.

30 Days at a Time

Your credit score is updated every 30 days. Improving your score will take some time but by implementing these changes you will start seeing a change in just a few months. Look at it as a challenge of how high you can get it!