There are a significant number of people that are affected by a less than perfect credit rating; this can cause significant problems when trying to arrange finance at competitive interest rates. Not only does a bad credit rating have an impact on your ability to arrange finance it can also affect your chances of getting a job in some cases. This is why it is important that you do whatever you can to improve your credit score by whatever means possible. So how do I go about doing that I hear you say? Before you can fix something you need to know what is broke!

Your credit score is made up of several different parts some of which are more important than others; I have listed them below in order of importance, with the most important factors at the top of the list.

Pay your bills on time.

This is of major importance and comprises of around 35% of your total score. This means that it is of the utmost importance to make sure you repay at least the minimum amount to your credit cards on time every month. The same goes for any other loans and or finance that you may have. Obviously this also applies to your mortgage, always try and avoid being late making any payments to any of the above. It is also worth noting that the more payments that show on your credit profile the better it will be. So if you were thinking of getting rid of a credit card or two, you would probably be better off if you used them to pay all your normal monthly expenses and repay them in total at the end of each month.

Do not max out your cards.

The next 30% of your score is determined by the difference between your credit limit and the amount that you owe. The more of your credit limit that remains unused the better it will look to the credit bureaus. As a general rule you are better off not using up more than 50% of your credit limit on each of your credit cards.

Maintain regular payments for a long period of time.

The next most important aspect when improving your credit score is to show regular repayments for as long a period of time as is possible. As mentioned above you would be better placed to keep credit cards going rather than stopping them, as the length of your credit history makes up for a further 15% of your overall score. If you do not want to keep using the cards just cut them up rather than canceling them as that will help towards improving your score rather than putting a total stop to them. Of course if you are being charged a monthly fee just for the pleasure of leaving the account open you would probably be better served canceling and taking out a new one with no monthly fees.

Use a variety of different types of credit.

The last 20% of your credit score is shared equally between any new accounts and applications for credit and also the types of credit that you have. If you have too many new accounts opening at the same time or too many new applications for credit this can lower your score. While having a wide variety of different types of credit will help to boost it.

Author Bio: Tom Dawson is a UK personal finance expert who helps countless people each month arrange bad credit loans and payday loans for any reason. Why not visit his site today?

Category: Finances
Keywords: credit score, types of credit, finance, loans, credit cards