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- Applying for credit negatively affects your credit score; don't ask for it unless you need it. Each time you put in a credit application, like a request for a new credit card or even an increased limit on a card already in your possession, your credit score goes down, whether or not the request is granted. Keep requests to a minimum.
- Get a hold of your credit record. Review it and remove incorrect, derogatory items. For example, maybe you paid a bill that is showing as outstanding, or perhaps a credit card noted that a payment was late that was in fact received on time. You can challenge these cases, and the firm that reported the item will have to justify it.
- This is critical. You must pay your credit bills by the proper date. Not doing so can hurt your credit significantly, impacting how much you pay for credit and even how much is available. The credit agencies and credit issuers are assessing how much of a risk it is going to be to loan you money. Late payments reflect poorly on the trustworthiness a creditor would like to see.
- You must use credit to build credit. Taking out a small loan and paying it back on time, getting a credit card and using it occasionally are ways to build credit. Start small. Secured credit cards or departments stores can be good starter cards if the major companies are not interested in issuing you a card.
- According to FICO, a full 30 percent of a credit score is the amounts owed. They do not release their algorithms to the public, but you will have better credit if the amounts you owe are low. This keeps the total amount you owe as a percentage of total credit extended to you low as well -- a helpful factor. Also, should you have cards you do not use, it may be advantageous to keep the accounts open, even if inactive, as that keeps your total credit extended at a high level.
Minimize Credit Applications
Maintain Credit Record
Pay on Time
Use Credit Wisely
Keep Balances Low
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