How to Improve Your Credit Score

A credit score is a number assigned to each individual that represents the creditworthiness of that person, i.e. the perceived likelihood that the person will pay their debts on time. A credit score is primarily based on credit report information, typically sourced from credit bureaus / credit reference agencies.

A credit score can range fron 400, which is extremely poor, to above 800, which is nearly perfect. Your credit score will follow you every where you ever go, which is the proverbial monkey clutching your back with incredible resolve if your credit score is poor. The good news is that it changes monthly, and there are some concrete steps you can take to improve your score. If you follow the tips for increasing your score, outlined below, you will see an improvement within two to three months.

Difficulty: Challenging

Instructions

Things You'll Need:

• patience
• commitment
• lots of bananas
• honesty about your situation
• one credit card

1. 
   The monkey you invite to sit on your back when you don't pay your bills on time

   Always pay your debts on time. Late and missed payments are the number one credit annihilator. Your credit score will drop dramatically if you make even one late payment, which will make it difficult to obtain loans in the future.

2. Pay your mortgage and car loans first. Because these are usually the largest debts, they count more towards your score. Paying your car loan and mortgage on time can quickly improve your credit score.

3. 

   Get one new credit card and use it. Don't charge more than you can pay at the end of the month. The idea is to demonstrate your ability to use credit wisely, not get in over your head.

4. 
   Common Squirrel Monkey by Luc Viatour

   Reduce the balance on any current credit or retail store cards. Pay down your balance so you are not teetering on the limit. High balance to limit ratio really feeds the monkey.

5. 
   Illustration for ancient Chinese book “The Journey to the West”

   Consolidate credit card debt. Pay off all your other cards by transferring the balance onto a single card with a higher balance. Having multiple credit cards makes you a risky prospect to lenders and makes improving your credit more difficult. So, consolidate your credit cards, make the payments on time, and send the monkey packing.

Tips & Warnings

• It usually takes two or three months to see any kind of change on a score, once you begin employing these tactics, so be patient.
• Be consistent. Get into the habit of paying your bills on time. If you have trouble remembering deadlines, sign up for automatic withdrawal from your bank account.

Resources

• 87 Specific Money Mastery Methods
• 101 Tips For Avoiding Procrastination
• Secrets of the LOA