Improving your credit score is not that hard to do; but financial planners make it sound like such a hard task.   There are ways to improve credit scores, you just may have to work at it a bit.  If you approach credit score improvement from a step by step process, it is relatively easy.

Ways To Improve Credit Score|Step By Step

Step #1 – Find Out Where Your Money Is Going

  • Track your spending.
  • Keep 2 logs of everything you spend.
  • One log will be for items you purchased which were a “need”.
  • The other log is for those items that are a “want”.

Step #2 – Live Within Your Means

  • If you are spending more than you are earning, you are probably using credit cards to pay for everything.
  • If you are spending more than your paychecks you are probably in debt.   To help yourself improve your credit score, keep your debt to a minimum.
  • Start an rainy-day fund, so you are not forced to always use your credit cards in an emergency.
  • Create a budget for yourself (for the “need” items).
  • Cut back your spending on the items listed in the “want” log.

Step #3 – Adjust Your Financial Habits

Payment History:

Improve your credit score by improving your payment history, which makes up 35% of your credit score.

  • If you do rack up credit card balances – – – pay at least the minimum amount due every single month on your credit cards.  These minimums are usually relatively low amounts.
  • Do not miss a credit card payment.  Do not make a late payment.
  • Missed payments lower your credit scores and credit reports.
  • Late payments over 60 days have a damaging effect on your credit scores and credit reports.  Late pays over 90 days old can damage your credit reports for up to 7 years.

Credit Limits:

ways to improve credit scoreImprove your credit score by working on your credit utilization ratio; which  makes up 30% of your credit score.

  • Your credit utilization ratio is your debt to credit ratio.
  • The amount of credit you have available to you is compared to the amount of credit that you use.
  • To have a good credit utilization ratio;try your hardest to not charge more than 35% of your credit card limits.

Length Of Credit History & Account Mix

You will improve credit score the longer you have credit accounts.   The length of your credit history makes up 15% of your credit score.   Your payment history and credit limits clearly make up the majority of your credit scores and credit reports.  Your account mix only accounts for 10% of your credit score.

One of the best ways to improve credit score is to be aware of your financial habits.   You work to earn money to buy things; and that’s terrific; but learn to earn and spend only what you earn.  By staying out of debt you can improve your credit score the easy way.