Every credit history is unique and there is no "one size fits all" solution for improving your credit scores. However, the two most important factors in credit scoring are your payment history and your utilization rate. Therefore, the two things that everyone can do to improve their credit scores are:
- Pay your bills on time, every time. Payment history is the most important factor in credit scores. Bringing accounts current and continuing to pay on time will have a positive impact on your credit scores.
Late and missed payments will significantly reduce your scores and can stay on your report for seven years from the original date of the delinquency. With time, the negative information will be deleted and the positive information will remain, improving your credit scores.
- Keep your credit card balances as low as possible. This is reflected in your utilization rate, or balance-to-limit ratio. Having a high credit utilization rate can negatively impact your credit scores. It's a good idea to keep your credit utilization rate below 30 percent. However, the lower your utilization rate, the better. People with the best credit scores have utilization rates of less than 10 percent. Ideally, you should pay the balance in full each month.
To get more specific information on what you can do to improve your credit scores based on your unique credit history, you can request a copy of your credit report and purchase a credit score. When you order a credit score from Experian, you receive the number along with an explanation of what it means in terms of risk. You also receive a list of the risk factors that affect your score.
While the numbers can be quite different, the risk factors tend to be very consistent from one credit scoring system to another. By addressing your risk factors over time, you can improve all your credit scores regardless of the system being used.
There is no quick "fix" for rebuilding your credit history. The length of time it will take depends on the severity of your previous difficulties. However, with time and patience, you can rehabilitate your credit history and improve your credit scores.
More tips on how to fix your credit report can be found on the Ask Experian blog.
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Scoped on: 9/5/2017