How to Fix or Repair Credit

As of 2009, the average American credit score was dropping, and stood at 651. Unfortunately, your credit score determines your ability to do the things you want in life, whether that's buying a car, purchasing a home or getting a job. It is therefore not surprising that consumers are constantly looking for ways to improve their credit score. Fortunately, by following a few simple steps, you can raise your rate to a healthy place.

Instructions

1

Pay your bills on time. Every time you miss a payment, are late or become delinquent, it is recorded on your credit report, which is utilized to calculate your overall credit score. This makes up 35 percent of your credit score, so turning around your behavior on this front can make a definitive impact.

2

Pay your debts off. The more debt you have in your name, the more of a risk you are to lenders because it indicates an inability to pay for what you need upfront, which can hurt your score as a whole. Your debt-to-available-credit ratio is also important. You may have $10,000 in debt, but if your $300 balance is 90 percent of your credit limit, then it will also reflect poorly on your score. This component accounts for 30 percent of your score.

3

Don't have too many open lines of credit. A large amount of available credit makes you a risk in the eyes of lenders because it presents the possibility for a large amount of debt accumulation in a short amount of time. At the same time, you should not close all of your accounts, because a lack of available credit or the quick closing of too many accounts can make you look unstable as a consumer. You want to have a stable, lengthy credit history, as this accounts for 15 percent of your score.

4

Attempt to establish different forms of credit. Your credit score is best served by having installment debts, such as mortgages and car payments, as well as revolving debt, like credit cards. Having too much of one category does not make you an ideal consumer and can lower your credit score. This makes for 10 percent of your credit score.

5

Be careful not to inquire into too many credit opportunities at once. Applying for multiple credit cards at one time, for example, sends a message to the companies calculating the score that you may be experiencing money flow problems, making you more of a risk and causing a temporary dip in your score. This accounts for 10 percent of your score.