Fixing Credit Scores

Credit scores fall between 350 and 850, and having a score within the 700 and 800 range opens the door to mortgage loans, auto loans and low rates on these loans. Fixing credit scores involve consistently good credit habits. You can learn how to manage your credit better and watch your credit score gradually improve.

Paying Bills

Paying bills late is a surefire way to destroy your credit score and receive loan and credit rejections. Timeliness is one of the biggest factors that affect scoring (makes up 35 percent of your score). Missing a payment or sending in a payment past the due date will result in late fees and lenders may report this information to the bureaus. A bad payment history can stop loan approvals and if approved for a loan, you can expect a higher interest rate.

Widen the Gap

Credit card balances close to the credit limit also harms your credit score. Lenders and creditors reviewing your credit report like to see a wide gap between your credit limit and the amount you owe. Because account balances make up 30 percent of your credit score, fixing your credit score may involve bringing down your balances to below 30 percent of your credit limit.

Review History

Make a yearly habit of reviewing your credit report and checking the document for accuracy. Information on your report affects your credit score. And if there's information reported in error such as collection accounts, judgments, liens or late payments, your credit score may suffer the consequences. Order your report from Annual Credit Report.

Eliminate Old Debt

Unpaid medical bills, utility bills or rental payments may appear on your credit report and lower your credit score. Fix your credit score by contacting these old creditors and offering to pay off your charged-off or delinquent accounts. Paying these accounts doesn't automatically remove the negative information from your report. Ask the bill collector or creditor to update your report after you've paid off the account.

Apply for a Loan

Acquiring a small loan and paying off the debt helps boost your credit score. Contact your bank or credit union and inquire about a small personal loan -- perhaps $500. Because of a low credit score or bad credit, lenders will likely require collateral or a co-signer. Make timely payments on the loan each month and attempt to pay off this small loan within a few months. Creditors will report timely payments to the bureaus and this information helps you build a better credit score.