Resolve Debt

There is no doubt that your credit score is one of the most important ways to measure your trust worthiness with respect to financing. Lenders use the information in your credit report to determine everything from your ability to qualify for a mortgage to the interest rate you get on a car purchase. Lenders, like most people, are risk adverse. Lenders want to take the least amount of risk for the most amount of return. Therefore, if you have a high credit score you are seen as been less risky than a person with a low credit score.

If you want to know how to improve your credit score, you will first need to understand that you will have to be prepared to wait, this process takes time. If you are looking to improve credit score numbers fast then you will be disappointed. The only ways to truly improve your credit score are to pay down your existing debt and to correct any information that may be incorrect on your credit report.

Credit software that lenders use look at the following sections of your credit report to determine eligibility:

• Amounts that you owe
• Types of credit used
• Payment history
• How long you have had credit

Below is a list of the top five ways to improve credit.

1. Improve Payment History

You must always remember to pay all of your bills on time. Even a single late payment can have a devastating effect to your credit score. Take care of any past due bills because they will cause lots of damage the longer you wait. If you think that you will not be able to make the minimum payments then you should contact your creditors to see if they are willing to reduce your payment amounts. Tell them your situation and be sincere. You may also look at getting a credit counselor depending upon how serious your credit problem is.

2. Maintain Minimum Levels of Debt

Try your best to keep from using your credit cards so that the balance will stay low. If you have a high amount of credit used on your cards it makes you look desperate for credit and this lowers your credit score. Try not to exceed 33% of your available credit. Also, don’t just shift your debt around, the sooner you actually start paying it off the better. If you have an unused account, it is best to keep it open. The zero balance on the card will actually help your credit rating. It is also important you stop opening new accounts because it makes you look like you absolutely need the credit.

3. Credit History Length

If you have a credit history that is shorter than 3 years then it is imperative than you do not open several new credit card accounts in a short period of time. Adding too many accounts too quickly will set off an alarm and it will show creditors that you cannot manage your credit wisely.

4. Mange Any New Credit Wisely

The credit score software is able to recognize when you are trying to get a single loan in a short period of time, like a home loan. If you have to have many reports pulled then you should pull them close together so it looks like a single inquiry. Also, contrary to popular belief, pulling your own credit score does not hurt you.

5. Types of Credit You Should Stick To

It is best to mix things up and have some credit cards and installment loans. A loan with a fixed payments will raise your credit score if you are able to manage your credit cards in a responsible manner. However, if you have too many installment loans you will damage your credit score since the payments remain constant until the balances are fully paid. You should also remember that even if you close an account it is not removed from your credit report. That account may still be used in your credit score.

Now that you know how to improve credit, it is time to start right now. Good luck on your journey!