Credit score is calculated using 5 major criteria in the following importance:

1. Payment history - 35%
   
2. Amounts owed - 30%
3. Length of credit history - 15%
4. New credits - 10%
5. Types of credit used - 10%
   
   

Payment history

Pay your bills on time. The more delinquent you get, the lower your score. If you have missed payments, get current and stay current. Also, be aware that paying off a collections account will not remove it from your credit report. If you're struggling making payments on time, contact your creditors to schedule better payment plans, lower your interest rate, or even consider consolidating your debt into one single payment with a lower interest rate than your combined payments.

Amounts owed

Make sure to keep your balances low on your credit cards. Part of your score is calculated based on the amount you owe versus your available credit. The more you owe (the less available credit you have), the lower your score. Also, focus on paying-off debt instead of moving it around from one card to another. Closing unused credit cards actually hurts your score because it decreases your amount of available credit and your amount owed stays the same. Also, instead of opening new cards to increase your available credit, consider calling your current card holders and ask for a credit increase, not with the intent to use it, but rather to improve your score.

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Length of credit history

Your account age is calculated based on the combined average age for all your cards. The longer the average age of your account, the higher your credit score. Opening new accounts lowers your average account age and hence lowers your credit score correspondingly. So, make sure not to open too many cards in a short period.

New credit

Applying for new credit sometimes becomes a necessity. So, when you do it, make sure you do it within a focused period of time, and not spread it on longer periods. Usually, most credit bureaus won't lower your credit score for up to 3 credit inquiries. So, when you're shopping for credit, be selective and let only the creditors you select check your credit. Also, unlike a lot of people think, checking your own credit doesn't affect your credit rating.

Types of credit use

Having a good mix of credit cards and installment loans will help boost your credit. Again, to reiterate, only apply for credit when you need it. Don't apply for credit just because it has a low APR or offers a great rewards system. Also, note that closing an account doesn't make it disappear from your credit report. In fact, closing an account will in most cases lower your score because it lowers your available credit.

For more credit improvement tips and success stories of people who improved their credit in less than 2 months, click here.