If you're wondering how to improve your credit there really isn't a simple solution. Bad credit sometimes takes years of bad habits and financial difficulty and shouldn't be expected to be fixed easily overnight.
There are reasons that a good credit rating is necessary, particularly when getting the best rates on loans and credit cards. Having a good credit score can literally save you thousands of dollars a year in interest.
Another reason to manage your credit wisely is for big purchases such as a car or a house. When purchasing a home, you will need to clean up some of the bad things on your credit report.
It is possible to improve your credit though, with a little bit of work and diligence.
Tips
Check Your Credit Report
Pay Bills On Time
Pay Down Debt
Introduction
Improving your credit may require you to change spending habits that you've had for years. Staying focused and keeping these tips in mind will help make the road less cumbersome and in the end, you'll have a credit score you can be proud of.
How to Improve Your Credit Score
Todd Ossenfort of Pioneer Credit Counseling explains in this video, how to improve your credit score with the basics of credit, an explanation of the FICO Score and Vantage Score, the basics of a credit score and simple ways to improve credit.
Step 1: Get a Credit Report
To have an idea of where you stand, you will want to start out with a credit report from all three credit bureaus, which are Transunion, Equifax and Experian. You do need all three credit reports because they do not all report the same things and all have different information.
You are eligible for a free credit report every year and can receive yours from AnnualCreditReport.com. If you have been denied credit recently, you are also eligible for a free credit report from the credit agency. Your report can usually be downloaded or if you choose, mailed to you.
Go through the credit reports and make sure everything is accurate. You can clean up quite a bit of bad credit by disputing any inaccuracies, such as accounts that are no longer open. If a debt is past 7 years old, you can also request that this be removed, unless it is included in a bankruptcy. If you have filed a bankruptcy, those accounts may be reported for up to 10 years.http://www.myfico.com/CreditEducation/ImproveYourSCore.aspx
Step 2: Pay Bills On Time
Probably most important is to pay the current bills on time. It may help to sign up for automatic payment so that it is debited from a bank account or if requested, most creditors will send email alerts of upcoming payments that are due. If you are having problems paying bills or keeping up, it may help to call the creditor and either set up a different payment arrangement or smaller payments.
Do not wait until there are judgments or bills go to collections. These are huge dings on your credit and will affect it negatively until it is taken care of.http://www.myfico.com/CreditEducation/ImproveYourSCore.aspx
Step 3: Pay Down Debt
Maxed out credit cards will cause your score to take a dip as well. Pay them down and if possible completely. It is generally recommended that credit cards are not used for more than 30% of the credit limit. http://www.latimes.com/business/la-fi-montalk6-2009sep06,0,6781202.column
