Be honest with me here.  How is your credit?  Is it great?  Good?  Or… not so good?  The fact is that hundreds of thousands of Americans have anywhere from decent to borderline terrible credit.  It doesn’t take much you know.  A missed payment here and there, a bill that you never received, one too many credit card applications.  God forbid that you face all of these dilemmas at once.  It’s easy to ruin your credit score (which is an extension of your credit report), and one would think it’d be much harder to improve your credit score.  It’s actually not, however.  In fact it’s not much harder to get a great credit score than it is to get a terrible credit score.

…it’s not much harder to get a great credit score than it is to get a terrible credit score.

There are four simple things that you must do if you want to improve your credit score.  They’re not terribly difficult things to do.  They will take some dedication, however, and they will take time.  To improve your credit score you need a minimum time horizon of six months, with a year being preferable.

Improve Your Credit Score: Step One

Your credit score is a reflection of your ability to manage credit extended to you.  In other words it calculates how well you do at paying your bills on time!  So it’s only natural that if you don’t pay them on time your score will free fall.  Step one to improving your credit score is this: Pay your bills on time.

Improve Your Credit Score: Step Two

Hypothetical situation: You go to the mall and you buy a great new outfit or some electronic gadget.  The store offers their own credit card and upon approval will take 15% off of today’s purchase.  Do you apply for the card? If you answered yes, then you are either dangerously frugal or a possible credit card addict.  The short story is this: if you open up too many credit cards or credit lines within a small amount of time it appears to the credit agencies that you are reckless and irresponsible with your credit.  Therefore your credit score will likely be dinged.  So step two is this: Stop opening new credit cards.

Improve Your Credit Score: Step Three

The so-called “utilization ratio” is a magical number that refers to the amount of credit that you are using divided by the total amount available.  For example I have a credit card with a $3,000 dollar limit and I owe $500 dollars on the card.  My utilization ratio with this card is 16.6% (3000/500).  This is a good number.  You don’t want to use any more than 50% of your available credit.  Actually to maintain a high a score as possible I recommend keeping your utilization somewhere under 30%.  So if you have a credit limit of $3,000 then you don’t want to have a balance of anything more than $900 dollars.  Step three, then, is this: Don’t use more than 30% of your available credit.

Improve Your Credit Score: Step Four

With recent changes to the credit scoring system it’s become progressively more difficult to “cheat” the system by artificially inflating your credit score.  That’s not to say, however, that it’s become impossible.  If you really want to boost your credit score much more quickly (and ONLY AFTER DOING THE FIRST THREE STEPS!) then you can always piggyback off of another persons’ good credit.  To do so you’ll have to be a joint owner on one of their credit cards… which might require a fair amount of trust and coaxing.  If you can manage to convince them to add you as a joint owner on their credit account though it should definitely help to increase your own personal credit score.  The final step is therefore: Piggyback on another persons’ good credit.

I told you, it really isn’t that difficult to improve your credit score.  It will take some work and some time, but it will be worth it in the end.  Good luck out there, and please if you have any other ideas leave a comment!