Tips For Credit Repair

Credit scores are the primary way banks judge your credit worthiness.  Credit scores range from 300 to 850 — the higher number, the better.  If you have a score below 550 you are going to have challenges getting loans for a car or even a mortgage. You are legally entitled to look at your credit score for free — you do not need to purchase anything.  These are some of our best tips to help learn your credit score and learn how to raise it.

Tip #1 – Learn the Basics of Credit Scoring

There are 5 key factors that determine your credit score. Learn how to use these factors to your advantage:

  1. Payment History – The most important thing you can do is make sure all your credit cards are paid on time. Late payments are the biggest shot to your credit worthiness.
  2. Amount of Credit In use – You want to keep the amount of credit you are using below 20% of what’s available to you.  If your combined credit available is $10,000, you want to make sure you’re not maintaining a balance more than $2,000.
  3. Age of Your Accounts – Keep your accounts for as long as possible. Ideally, you would want to have at least one or two credit cards open for years. This shows you are able to maintain your “impulse buying” and only use the credit cards when necessary.
  4. Mix of Credit Types – This is difficult for a young person getting started but it refers to a mix of credit cards, personal loans, car loans, mortgages, etc. You don’t want to be heavy on one type or another.
  5. Amount Of New Credit You Have – Just because you get an offer for a new credit card doesn’t mean you should take it.  Keep the amount of new credit you have to a minimum and only grow your available credit when necessary.

Tip #2 – Access Your Credit Report Annually

Your credit reports determine your credit score. It only makes sense that you see what’s on them. According to federal law, you are legally entitled to look at your credit reports once a year. You can see all of your credit reports from the 3 major credit bureaus at once by going to Looking at your report will allow you to see the factors that are directly affecting your credit score.

Tips #3 – Pay Your Bills on Time

This point cannot be stressed enough so we will mention it again. Nothing will affect your score more negatively than late payments.  Although the effect will diminish over time, you want to avoid this at all costs. Approximately 35% of your credit score is directly affected by your payment history.

Tip #4 – Pay Down Your Credit Card Debts

The next biggest contributor (30%) to your credit score is the amount of debt you let ride, month to month, on your credit cards.  If you continually let your credit cards stay maxed out, it will have as much of an effect on your credit score as late payments.  Even if you pay off your balances each month, the amount of credit you’ve used at the time of your monthly statement is the amount of debt used to calculate your credit score. Keep your balances low at all times during the credit card cycle.

To help keep you on track, we recommend a piece of software called You Need A Budget.  This piece of software will help you learn to spend within your means as well as control your credit card spending.