Simple Credit Score Increasing Tips (Pt 1)

Your credit score is nothing more than a number that approximates how likely you are to be able to pay back your debts. It takes a number of financial factors into account, from how well you've paid back the debt you currently have to what type of credit you've already used before. Having a good credit score is necessary these days to acquire any large scale loan that you require (from a car loan to private student loans to a down payment on a house). A great credit score will help you out even further, as the better your credit history, the lower the APR you can expect to get on those loans.

Unfortunately, a lot of people have very low credit scores and they don't even know it. People with bad credit tend to not want to even look at their credit score due to a mixture of guilt and fear. Still, it's unlikely that you'll be able to start repairing your credit if you can't even bring yourself to see exactly how bad things are.

The first step to getting your credit back on track is knowing what your credit is in the first place by checking your credit report. Everyone is entitled to a free annual credit report by going to annualcreditreport.com and selecting one of their free services. A credit report will outline exactly what you owe, to whom you owe these amounts, whether the accounts are in good standing, what problems poor accounts might have, your most recent payments, and the most recent inquiries made by creditors to your account.

In addition to reading your credit report, it's also a good idea to check out your credit score. You credit score is determined by the following factors:

- 35% is based on your payment history. - 30% is based on how much you owe. - 15% is based on the length of your credit history. - 10% is based on new credit. - 10% is based on the types of credit used.

From this breakdown, we can figure out a couple of ways to increase our score and repair our credit.

The biggest bulk of your credit is based on your payment history and how much you owe relatively to how much you can borrow (ie; your credit card balance relative to your credit card limit). These two factors determine a full 65% of your credit score, so it's important to get them under control immediately. For starters, it's important that you begin to make all of your payments on time. If you already have late or delinquent payments, there really isn't anything you can do about those except make sure you don't accrue any more. Making all your payments on time is one of the single most important steps you can take to establish positive credit. While it can be easy to lose track of the time and miss payments here and there, it's very simple to set up an auto-pay system where your bills automatically deduct from your account.