How to Improve Your Credit Score

How to Improve Your Credit Score - as part of the expert series by GeoBeats.

Now how does one go about improving their credit scores? Pretty much is going to be the opposite of what we just talked about. First off, check your credit history every year and you want to make sure to focus particularly on the past two years because it is going to be rated more heavily to the history in that time period, and payment history is 35% of your FICO score. So this is particularly important. Check for accuracy and potentially any red flags that you see, and once again, try to clean up anything that is inaccurate or that is inappropriate in your opinion.

Secondly, we talked about how taking a lot of debt, or high amounts of... taking on high amounts of credit relative to your credit limits, is also an issue. So you want to keep your debt balances low relative to your credit limits. The debt balances... the amount of debt that you are acquiring on your cards is responsible for 30% of your credit score. So keep those debt balances low relative to your credit limits.

You also want to make sure that you have a credit history. And this is going to sound kind of odd, but the people that do not have a lot of debt, or do not have a huge history with regard to debt—they pay for everything in cash—they have lower credit scores. So, for example, let's say you have a student, a young adult, he has no credit history. Have him build a credit history by perhaps being on your credit card, taking out a small student loan or car loan and showing a history of paying that back even though you are going to help him pay that back. He is establishing a credit history.

Let's say that you paid off your mortgage years ago and you never take on debt, you may want to, for example, buy a car but take out a small car loan, pay it off in two or three months. You are establishing that history and actually that improves your credit scores. So that way, if you ever do need to seek out credit, you have a good credit history. You have established a credit history.

So that is something else that you definitely want to look at is the, not only the frequency of your credit history, but also the diversity of your credit history. So, it is important to have to show that you are paying your credit cards on time, that you have perhaps paid a student loan off and you have paid a car loan, so you have different types of credit, you are showing a solid payment history and it is over a number of different types of debt.

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