If you are one of the millions of Americans with bad credit, it can be fixed, although it does take time. In fact, the best way to repair your credit score is to try to address the issue systematically, and your credit history will have to be repaired in order for your score to improve. The following are ways to improve your credit score which are grouped into the same categories used to determine your credit score, and can help you to improve it:
Firstly, check your credit score for accuracy and if you have not already done so, request a free copy of your report. Check for errors such as incorrect reporting of a late payment or incorrect balance amount.
Making loan and credit payments on time affects your score significantly, and if you have not already done so you can set up online automatic bill pay, or have a reminder emailed to you when a bill is due. This will not reduce the amount owed as it will still only pay the minimum on a credit card balance.
Reducing the amount of debt that you owe is not always easy, but it can make a huge difference. Try to stop using your credit cards and in addition try to come up with a budget plan that makes higher payments to those cards that have the highest interest rate.
Your payment history is 35 percent of your overall credit score, although once you have a history of missed or late payments, it is not easy to fix it.
All you can do is try to make payments on time; the longer you do this for, the better your score will be and as time goes by, the late and missed payments will carry less weight. A collection account will stay on your credit report for seven years, regardless of whether it is paid off or not.
If you really cannot pay your bills every month, a good strategy is to consult with a qualified credit counselor, and doing this will not hurt your credit score further.
The amounts owed on your cards makes up 30 percent of your score, and one way to improve this is to have fewer open accounts, even if between them they have the same amount owed. Do not get a credit card just to increase your available credit.
The length of your credit history is also a factor and a rapid buildup of credit can hurt your score, as can a new account which lowers your average account age. If you have had problems in the past, it is acceptable to re-establish your credit history and it is also OK to check your own credit score as long it is through an official organization.
If you are trying to rebuild your credit score, do not open accounts just to get credit, and in general making payments on time on an installment loan will help you. Closing an account is OK, but it will still reflect as part of your credit score.
Fixing and getting a good credit score is possible, but you should not expect it to happen overnight. The best thing you can do is to check for any errors, fix them, and then try to maintain good spending and credit habits over time.