Here is how to create a plan for improving your credit score.
First and foremost you have to order your credit report and score.
Before you can begin repairing your credit you have to know where you currently stand.
After you receive your report and score you'll be equipped with everything you need to start raising your score.
If you have a bad score your report will tell you in detail what you are doing wrong and also what you are doing to help your situation as well.
Common problems include having too much debt in your name, having too many unpaid bills, having recent financial disasters like bankruptcy, not having a long enough credit history, and default loans and collection agency reports.
When improving credit everyone's situation is different.
That is why an individual plan based on your credit report that is tailored to your specific situation will work best to boost your credit score.
Depending upon which of the common problems I listed above pertain to you and your particular plan will differ.
Credit counselors and repair agencies typically work with their clients to create a personal plan of attack based on their situation and their credit report information.
But with the information found in this article you can go about this by yourself and save yourself some money.
Before creating your plan of attack you have to know what sections of your credit report are affecting your score the most.
Your credit history usually accounts for about one third of your total score.
As you can see this is a major area for improvement.
Unfortunately this section of your credit will take the longest amount of time simply because credit history cannot be built overnight.
It will take a long steady history of on-time payments in order to improve your credit simply by focusing on this section of your report.
Since you can't do much about your history because what's in the past is in the past you should focus on paying all your bills on time from here on out.
Another giant chunk of your credit score is attributed to your current debts.
This also accounts for around 30% of your score.
If you currently owe tons of money this is going to have a negative impact on your rating.
If you are near the maximum credit limit on any cards you may own this is also seen as a warning sign to possible lenders.
Experts say the ideal credit to balance ratio is about 30%.
To help boost your credit score by working on your current debt I would suggest paying down as much money as possible on the accounts that are near their credit limit.
Not to be confused with credit history, but how long you have had established credit is also a factor in determining your score.
Usually people start building history around the time they head to college.
I know that is when I started receiving preapproved credit card applications in the mail.
Although they say your credit history begins as soon as you either apply for a loan, card, or even open a bank account.
If you have not had a lengthy time with established credit under your name lenders will not have enough information to determine whether you are a great risk or not and they usually won't take any chances.
That is why not having a long established credit history is look at as a negative.
The only suggestion I can offer you is to not close any long-standing accounts you have open regardless of whether the full amount has been paid off.
One more factor in determining one's credit score is the types of credit they have.
Letters like to see a variety such as mortgages, automobile loans, credit cards, student loan's, and other personal loans.
This just ensures to them that you are responsible in a variety of different situations.
So by breaking down each portion of the credit report and narrowing down the areas that you need to focus on you can see how easy it is to create an action plan for improving your credit.