The first step in improving your credit score is to get a copy of your credit report. Everyone is entitled to a free one once a year. You will also need to get a copy of your credit score. With these two items in hand, you now need to figure out if your score is in the poor range.
If your score is 770 or higher, congratulations, you have a high score. Really anything above seven hundred is very desirable. And if you have no late payments showing on your credit report, a lower score can still be considered very good. But anything below a seven hundred will not get you prime rates typically.
So how did you get a low score? Have you had a bankruptcy or foreclosure? Either of these will vary adversely affect your credit score – for quite a while too. Late payments are not good either. The best way to start raising your credit after such an event is to take out small loans that you are sure you can pay back. Also make timely payments on all your bills.
If you have no adverse events on your report yet still have a lower score, its time to look at balances on your credit cards. Ideally, your debt to credit ratio should remain below twenty five percent should you find yours above that ratio, you may want to seriously consider paying that debt down.
Strangely, even if you diligently pay off your credit card balances each and every month, your credit report may show as carrying a balance. It will simply depend on when in the month the credit card company reports to the big three credit bureaus. This really is nothing to fret about though, as most lenders are aware of it.
Another potential mark on your report is having too many accounts open. However, don't close accounts you currently have as this is not a good sign. But if you feel that you need to close accounts, close the most recent ones opened. You want to maintain a long history of good payments.
Obviously, you do not want to open any new accounts that are not absolutely necessary. Typically, opening a new account will lower a score a bit. This is only temporary, provided you use good judgment with the credit card.
Credit card handling and management is a huge part of your credit score and history so treat it with respect.
You may see a temporary dip in your score every time you apply for new credit. This will clear up with on time payments.
A short history of credit will also keep your credit score in the low range. But as long as you make on time payments, and handle your credit wisely, your score will rise. That's how the system works.
You may want to get a loan or credit, but find yourself with a low score from a short history. In this case you may be able to get a co-signer to help you out.
All in all the answer to the "how can I improve my credit score?" question is to just pay bills on time, and don't over extend yourself. In time your score will rise.