Repair Your Credit By Increasing Your Credit Scores


A credit score is a statistical analysis that is used to determine creditworthiness. It takes into consideration all of the information on a credit report including both positive and negative information and the amount of credit available compared to the amount of credit used and all open accounts. You can take steps to repair your credit and thereby increase your credit scores and improve your credit standings.

The most commonly used and widely recognized credit scoring system in the United States is the FICO score, which was developed by the Fair Isaac Corporation. There are other credit scoring systems available but none are so well known as the FICO score.

FICO scores use fair and objective measures to determine your credit score. These include credit problems you have had in the past along with current levels of debt. Race, gender and ethnicity are of course, never considered but things like job history and the amount of money or assets that you have on hand are also not considered even though these things are becoming increasingly important in the current economy.

Credit scores are used to determine creditworthiness of an applicant and they also are used to determine interest rates and credit limits. A credit score may also determine if more collateral or a more extensive income and asset verification is required.

The initial step to credit repair is to get a current copy of your credit report from each of the three main credit-reporting agencies, Experian, Equifax and TransUnion. Scores vary widely among the three so it is important to get all three of them. You are entitled to a free report from each of the agencies one time per year or you can also pay a fee and receive a tri-merged report that is a combination of all three.

As you attempt to repair your credit make sure that your finances are in order. All of your payments must be made on time and you must be living within your means or you will be creating more negative credit and you will defeat your purpose. If you can try to pay down your debt because a large portion of your credit score is based upon your outstanding debt compared to your available credit. Keeping your debt at 20% or below the amount of credit available is crucial to keeping a high credit score.

The length of your credit history, your outstanding debt balances and any recent credit applications also affect your credit score. Be circumspect when applying for credit because every single inquiry drops your credit score for a time. Never apply for credit unless it is absolutely necessary. Also, if you have credit cards that you no longer wish to use, be aware that when you cancel them it hurts your score because it reduces the amount of available credit that you have. If you no longer want a credit card, then just put it away but keep the account open for a higher credit score.

You can dramatically increase your credit scores and improve your credit rating in a short period of time if you take just a few simple steps. Make sure that you are consistent with all of your payments and avoid additional credit for a while until your credit repair has been improved.


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