You have just taken a look at your credit score and it’s a bit lower than you expected. You need the sore for any number of reasons including taking out a small personal loan, applying for a mortgage, or even applying for a credit card. Have no fear about your average credit score, because you are about to read five methods can turn your bad credit upside down within a matter of months.

How A Credit Score Is Determined

By understanding what factors make up your credit score, you will be able to avoid mistakes while in process of credit repair.

A credit score is composed of 5 essential factors as shown below:

  1. Payment History
  2. Amounts Owed
  3. Length of Credit History
  4. New Credit
  5. Types of Credit Used

By breaking down these five areas, you should be able to readily identify what issues contributed to your credit score. This is the first step in taking action to correct past missteps.

5 Steps

Pay Bills On Time

Make sure that you are paying your current bills on time. If this is the cause of your less than stellar credit score, why not fix the immediate damage?

If you’ve having trouble making payments for any reason, contact the lender and explain your situation. Lenders like to get paid whether it’s in large or small increments. If you’ve been behind on your bill, they may be willing to work with youjust to get their money back.

Get A Credit Card With A Low Credit Limit And Use It

Applying for a credit card with a low credit limit will do two things for your credit score:

  1. You will be maintaing revolving credit which is important to increase your score.
  2. A low credit limit will allow you to use it and pay it off in a timely fashion.

For an added bonus apply for one of the many incentive laden credit cards. From dividend dollars to airline points, you can not only repair your credit, butreceiverewards back on your expenditures.Just be sure that you actively use your credit card. A great habit to develop is buying groceries, gas, and othernecessitieswith your credit card, and paying it off when you return home.

Take Out A Small Personal Loan

Taking out an installment loan (one in which is paid over a period of time in installments) is another important move because credit bureaus like to see that you have both revolving credit and installments. This shows the credit bureaus that you are a responsible with both major kinds of credit.

Student, auto, and small personal loans are all examples of installment loans that can greatly improve your credit rating. Just make sure with any type of debt that it is paid in on time.

Use Old Credit

Did you ever have an old credit card that you cut up or just threw in a junk drawer?

Take it out or request a new card and use it. The credit reporting bureaus love seeing old credit still in use. The card issuers may either close the account of stop reporting the card’s use to the credit bureaus. In the grand formula that results in your credit score, this can have a negative impact.

Having old credit looks good and shows that you are a trustworthy consumer.

Don’t Be Afraid To Speak Up

If you’re a longstanding or great customer, ask for help. Some lenders may offer assistance with repayments or even discounts to pay in full. From hospitals to store credit cards, often times, they want to get paid. In order to do that, they may give a discount to receive paymentimmediately.

Check your credit report for any errors or omissions. No matter how long ago they occurred they can actually still be disputed or resolved.

If you’ve noticed errors, take care of them. Be diligent.

Repairing your credit score takes determination, a bit of will power, and time. This 5 step plan will improve your credit score within months if you can remain focused. Spend less on consumer goods and add a little more to your bills. Make raising your credit score your primary goal.