improve credit score

How to Improve Your Credit Score – The Right Way

It is probably safe to say that everyone would like to have a better credit score than they currently have. This is human nature. We always want just a bit more and we always strive to make our circumstances just a bit better. 

Having said that there are some people who not only want to improve their credit score they have to improve their credit score if they are ever going to be able to have that basic infrastructure that we all know as the American dream. 

Everyone knows the basics. You need a house which you can’t afford without a mortgage. You need a spouse and then kids (that’s not everybody’s dream – lol). A family is expensive. With a family, you need cars that are dependable and good enough to drive with confidence. Cars also require a loan if you want something decent and fairly new. This is the very minimum of the traditional American dream and it typically requires credit scores respectable enough to get a mortgage and a car loan or two. You also need a couple credit cards for various types of purchases as well as to have some extra spending power available for whatever reason lurks in the future. 

If you are one of those folks who have bad credit and need to improve it in order to obtain the credit score necessary to obtain the basic infrastructure of the American dream then you need to start taking some steps to improve your financial position as judged by the credit score formulas. This is a doable task. Follow the steps bellow and you will improve your credit score.

5 Great ways to Improve Your Credit Score

  1. Never Miss a Payment – Always make the minimum payment at the very least. This is huge! Even simply overlooking a due date by a day or two can cripple your credit score and certainly ruin plans of improving it. Take great care to pay on time and be sure you always have enough for the next month even if something bad and unexpected happens.
  2. Increase Credit to Debt Ratio – Do All You can to Increase the amount of available credit you have as compared to the amount of debt you are holding. These means don’t cancel credit cards. It is great to have several credit cards that you don’t or barely use. This is because they provide you with available credit. The more credit available to you the more likely a lender is going to want to offer you a loan and the lower the interest rate you will be offered.
  3. Monitor Your Credit Report and Score – Keep a close watch on your credit report. Errors wrongfully lower individual credit scores all the time and the chances are it will happen to you or already has happened to you. Very often these errors are caught and reconciled before the consumer even notices it. Also if the consumer is the one that catches the error they are able to report it and get it dealt with in an almost timely manner. 
  4. Make Right What You Obviously Once Made Wrong – If you have bad credit then you have most likely been a bad person to loan money too. This means you don’t pay back what borrowed. That is a bad character trait and is totally destructive to your credit score and thus your ability to borrow through traditional consumer financing products such as the low interest 30 years fixed rate home loan. If you are able to make good on past mistakes then go for it. You may have to settle some credit accounts. If you have old unsecured credit card debt or a similar form of unsecured debt that went bad then you should be able to easily settle your debt for 40 cents on the dollar with a little effort.
  5. Know Credit Score Variables – Understand the basics of how a credit score is calculated. I have a great resource here on this finance blog that explains how your credit score is calculated

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