How To Fix My Credit

There are a number of reasons why your credit score is low.  We'll list a few, and then we'll go over some ways on how to improve your credit score.  The actual method for calculating your score is probably one of the best kept secrets in the world.  But we do have some known methods to understanding and improving scores. 

1. What drags that credit score down?
   • Errors on the report
   • Too much used credit to available credit
   • Late payments and missed payments
   • Too much debt to income
   • Too many inquiries on your credit
2. How can you improve the score?  Let me first be very clear.  Most of the recommended credit repair tips aren't going to improve things immediately.  With the exception on fixing an error on your report, time is the best thing you have going for you.
   • Errors on the report?  There are three credit reports.  If you find an error, contact the credit agency directly.  You may need to file the report with the agency in writing.  Be clear and specific and let them know what is wrong.  They will have to remove the offending item immediately while they research it.  When they determine that you are correct, the item is removed permanently.
   • Too much used credit to available credit?  If you have a credit card with a $2,000 limit, and you have charged $1,800 on that card, the $2,000 is your available credit and the $1,800 is you used credit.  If you have all your cards maxed out, the credit reporting agencies will lower your score.  There isn't much in the way to fix this other than stop spending and pay the debts down.
   • Late payments and missed payments?  Here again, time will help you.  Unless they are wrong on the credit scoring, if you go forward making your payments on time and making at least the minimum payment, your late and missed payments will have less and less of an impact.
   • Too much debt to income?  This is similar to the "too much used credit to available credit".  The best thing to do is get a raise.  Other than that, work on getting your debt paid down.
   • Too many inquiries on your credit?  You can't control all of the inquiries by various lenders.  However, any time you initiate an inquiry, by filling out a credit card application for example, that shows up as a ding against your credit.  The occasional inquiry isn't a problem.  Too many in a short period is a big problem.  Be picky about your credit applications and keep them to a minimum.
3. The credit agencies also look at how long a particular card or loan has been open.  Some people think that if they close those old cards they never use, that will raise credit score.  Often, that has the reverse effect.  That old credit card that isn't being used is still providing a long credit history.  The agencies like to see credit that has a long history.  They especially like it if the credit line isn't maxed and has an on time payment record.

As I mentioned before, there are numerous factors that affect your credit scores.  The recommendations mentioned here certainly don't cover all the possibilities.  It does pay to monitor your credit reports regularly.  The earlier you catch your score headed south, the sooner you can begin to push it back up.