So You Need to Improve your Credit Score

It's no secret that many folks are having credit problems lately.  Some have experienced bankruptcy or foreclosure - still others are late on payments.

But if you are one of the millions out there with bad credit, there are several things you can do to improve your position.

(1)  One of the quickest and possibly best methods is to obtain and use a secured credit card to generate quick positive history on your credit report.  A secured credit card reports very much like a regular credit card, but is easier to obtain because, you are essentially placing funds into the account as a deposit.  All you need is a job, and the ability to make payments to the card.

The bank secures itself by holding the deposit from you, which is equal to your credit limit of the account.  The lender will take the amount you owe from the deposit should you default.  However, if you upgrade to an unsecured card, or cancel, your deposit is returned to you.

(2)  Another simple way to enhance your FICO score is by reducing your limit to balance ratios on any credit accounts you may have.  50% is the magic number that you need to work toward.  To provide an example, if you have a $5,000 limit, you need to try to reduce that to no more than $2500 on your balance.  Your FICO score will drop anytime you go over this ratio.

You can reduce a balance fastest by either paying down your balance or calling the lender and asking them to provide you with a credit line increase.  If this doesn't work, you can distribute balances to other cards keeping all balances to limit ratios less than 50%.

(3) A less effective credit repair tools that can still be useful, is labeled the piggyback method.  To implement this tool you will need to have a relative or close friend with excellent credit, and credit account(s) with a low balance to limit ration.  If your relative/friend is willing to add you as an authorized user, this can help infuse positive history on your credit report.

But, it is important to understand that if your relative or friend suddenly starts paying late, it may reflect on your credit as well.  So be certain the person you ask for help with this credit improvement method is strong financially.

Last and not least, should you use a relative or close friend for this method, be just as certain to respect the assistance they have provided you.  Make sure you are timely with your payments, and are honoring any agreements you made with them.  After all, to not do so, not only will lose any good credit hopes you wished to obtain, but will likely lose you a valuable relationship as well.