How to Improve My Credit Score

These days having a good credit score is like having legs, without it you will find yourself hard pressed to walk into a secure financial future. It’s always good to have good credit scores, but in economic downturns and recessions, it’s even better. As credit tightens up, lenders pay closer attention to credit scores when considering giving out any form of credit. In a recession, having a good credit score can give you a huge advantage over someone who doesn’t.

Why? Because in economic downturns, there are fantastic deals to be had, especially in real estate. However, the only people who can capitalize on this are people with lump sums of cash and people with good credit. If you have bad credit, you’ll be left standing outside. Being able to apply for unsecured loans can really give you access to incredible opportunity.

So, you ask, how to improve my credit score? There are several things experts suggest you can do to improve your credit.

Check Credit Report for Any Errors

As much as you might like to believe the main credit companies won’t make any mistake on your credit report, it’s simply not true. Finding errors on your credit report are all too common. There is absolutely no reason at all for you not to take a look at your credit report and check for errors. If you find an error, you have a legal right to challenge it. Credit companies must investigate and made changes (if true) within 30 business days. Getting errors removed from your credit report is the fasted way to get a bump in your credit score.This is one of the fasted ways how you can improve your FICO score.

2. Pay your Credit Card Balance Each Month

If at all possible, make sure you always pay off your credit card balance each and every month. When you only pay the minimum, you make the credit card company money. Keep in mind that a lot of credit card charge interest between 10-20% -- with figures like that, you can find your interest is more than your original amount if you miss a couple credit card payments. This is one of the first ways how to improve your credit score. When you pay off your credit balance each month, you demonstrate will pay your bills on time and your FICO score will increase.

3. Don't carry more than 1/3 of your credit limit as an outstanding balance

As a rule of thumb, if paying off the full credit card balance each month is not possible, try as much as possible not to let the total balance you owe exceed more than one third of your total credit card limit. When you carry more than a third of your total balance for a couple months, your FICO will get flagged and your score will take a hit. This is one way how to improve your credit score that people don’t usually know about.

4. Use Only Two Credit Cards

You’ve probably head it before but it’s true: having more than two credit cards will hurt your FICO score. This is because credit agencies don’t like when people have too many cards. IF you have more than four credit cards, but only use 2, your credit will take a hit. These days, all you need are a MasterCard and a Visa. Don’t have any more than these unless you absolutely need to (such as an American Express Card for business). If you do have more than 2 cards then by all means, USE them. Don’t just use one or two and let the other sit dormant. If you use them all and actively repay each card’s balance each month, your FICO should hold steady.

5. Never Miss Payments or Be Late with Payments

The golden rule of credit: don’t ever miss or be late with your payments. A single payment can destroy perfectly good credit. There are different types of credit “hits” you can take. Missing a credit card payment can hurt, but there is some allowance for this and you can recover from it fairly easily. If you miss or are late with a mortgage payment, you will devastate your credit score. Why are missing mortgage payments considered so bad by credit agencies? Because they know that simply having a roof over ones head is essential – missing a payment on this is a sure sign that an individual is in dire financial straights and a risk.

I recommend taking a look at the following hubs if you happen to have bad credit:

• How to Buy a House with Bad Credit History
  

• How to Get a Bad Credit Loan

• Mortgage Loans for People with Bad Credit

• How to Buy a House with No Money Down

• How to Get a Mortgage with Bad Credit History

• Consolidation Loans for People with Bad Credit
  

• Remortgages for Bad Credit

One thing you need to keep in mind is not to feel embarrassed about your low credit rating. Most people have had bad credit at one point in their lives. Simply accept that you made some mistakes with your finances and resolve not to repeat them. If you follow the above tips and faithfully make payments, you can see a remarkable improvement in your score in a little as a single year. If you are asking how to improve my credit score, follow the above five tips.