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Credit Repair Tips

3 Things You Can Do Now To Improve Your Credit Score

Your credit score is a measure of your financial reputation and is based on the credit history that has been reported by your creditors to the credit bureaus.  Only actions that are reported to the credit bureaus affect your credit.  Because of the way credit scores are calculated, some actions affect your credit score more than others.  In general, paying your bills on time and meeting your financial responsibilities will have the biggest impact on your credit score.  Other actions, such as not being overextended with credit also affect your score.  The credit score algorithms reward people who have demonstrated an ability to repay their debts, and who do not appear to be a financial risk.

Here are three tips you can use right now to boost your credit score:

1. Pay Your Bills On Time! This should be a no-brainer.  To boost your credit score, you need to pay your bills on time.  Responsible repayment of debt is the single biggest factor that affects your credit score.  The credit score algorithms figure that if you have a history of paying bills on time, that you will continue to do so in the future.  Experts estimate that up to 35% of your credit score is based on your paying of bills on time.
2. Don’t Get Overextended Lenders want to know that you will have enough money left each month to pay them back.  If you have many lines of credit or several huge debts, you make a worse credit risk because you are close to “overextending your credit.” This simply means that you may be taking on more credit than you can comfortably pay off.  Even if you are making payments regularly now on existing bills, lenders know that you will have a harder time paying off your bills if your debt load grows too much.  The credit score algorithms take your debt load into account.  If you have too much debt, your score will plummet. 
3. Pay Down Existing Debt This is related to tip number 2 above.  If you have a lot of debt, your credit score will suffer.  Paying down your debts a manageable level, and your credit score will improve.  For example, if you have a $1000 limit on your credit card and you regularly carry a balance of $900, you will be a less attractive credit risk to lenders than someone who has the same credit card but carries a smaller balance of $100 or so.  If you are serious about improving your credit score, then start with the largest debt you have and start paying it down so that you are using a less large percentage of your credit total.  In general, try to make sure that you use no more than 50% of your available credit.  That means that if your credit card has a limit of $10,000, make sure that you pay it down to at least $5,000. What counts here is what percentage of your total credit limit you are using - the lower the better.