How Can I Fix My Credit - What Do I Need To Do?

There is no one thing you need to do instead there are a few

. We will go over them and cover how these are factored into your score calculation.

1. Payment History - This is hands down the most important piece of the puzzle. This looks at your history with credit. This is where all the negative items are counted. This is about 40% of your overall score.

You can do two things to fix this. First, pay all your current bills on time. If you have a credit card make sure you don't have it maxed out, more on this later, and if you can pay sizeable chunks it will help. By making on time payments now, you will start to build a trail of positive payments.

Second, you need to remove the negative items from your credit history. This includes: collections, judgments, repossessions, late payments You can do this by hiring a professional law firm or you can file a credit dispute yourself.

2. Available Credit to Debt - This will look at your available credit. For example, if you have a credit card and can show that there are funds you are not using you will benefit. Let us say the credit limit is $1,000 ideally you should try and keep a monthly balance of $300.

This will show that you are using your credit but using it responsibly. Additionally it will appear that you are in a secure financial position because otherwise you would be borrowing every available dollar.

This area also looks at how much overall debt you have. It will count everything; student loans, car loan, credit cards, boat loan, mortgage, any and all debt. This won't kill your score if you have a lot of debt like student loans. The important piece here is to show available credit and this area counts for about 30% of your score.

3. Length of Credit - You really have no control over this and is simply how long have you been using credit. It also looks at the length of your accounts. For example, how long have you hade a particular credit card. This is 10% of your score.

4. Types of Credit - Here is another factor you don't have a huge amount of control over. You should concern yourself with this it is only 10% of your score and is what types of loans have you made. In general they see if you have a mortgage, car loan, student loan then you are a better risk than someone that only has credit card debt. We think it is a result of appearing to be established if you have different types?

5. How Often Is Your Credit Checked - This is also called credit inquiries and is again only 10% of your score. However you do have some control over this because the more often you try and finance a purchase the more often you are having your credit checked. Obviously if your credit is being checked frequently you will appear a bit more risky, than if you just have periodic checks as that is a natural result in life for it to be check occasionally.

In sum, these are the 5 keys to your score. You can influence some and clearly some are worth more of an effort to improve than others. You don't have to just live with bad credit, take action and start fixing your score today.

by: Jason Abmramsons

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