A credit score is a measure of credit risk calculated from a credit report using a standardized formula. The standardized formula is called the FICO which stands for Fair Isaac and Company, the actual company who pioneered the mathematical calculation during the late 1950's. The Fico score is based on several factors. These includes late payments, missing payments, number of open accounts, length of one's overall credit history, actual amount of available credit used and negative occurrences such as charge-offs and bankruptcy.
In many cases, it can take years to recover from financial crisis and a bad credit score. This unfortunate situation can affect your life like the vehicle you drive, the job you have and your ability to obtain adequate insurance. But there are several ways of improving your credit score.
You have to concentrate on performance factors by being punctual in paying you credit balances. Keep your balances low by postponing big purchases, keep card use to a minimum and pay down as much debt as possible. You also need to get more credit for your history by using your old cards every six months to buy something small.
In order to improve your credit score, you also need to improve the looks of your limits by asking your banks to up your credit limits. But you should do it if you can discipline yourself in not spending too much if you have greater credit limit to avoid problems later on.
You also need to correct some mistakes in your credit report because it can help improve your score quickly by reporting the errors to the credit bureau online. Be sure to review your official records from all three major credit reporting agencies namely Equifax, Experian and TransUnion. You can get the free credit report from them every 12 months through annualcreditreport.com.
Finally, just continue to pay your bills on time and watch your spending habits. Always remember that missed payments will become less significant over time but will count as a negative for the full seven years it will remain in your credit history. Don't ruin the good reputation you have so that you will have better credit score.