How can I improve my credit score?

Credit and credit scores are extremely complex. The three major credit bureaus view your credit creating three different scores. Most lending institutions will use the middle score of the three numbers, or mid-score. If you are married, they will price your interest rate based off the lower of the two mid scores. Your credit scores are generally evaluated based off the following types of information in your credit report.

1. How long is your credit history? The length of your credit track record plays a major role. If you can demonstrate longevity and the ability to repay for a long time, this is heavily taken into account. 
2. Do you pay your bills on time? Credit scores drop much faster than they rise. When you miss a payment, especially a mortgage payment, your credit score can severely suffer. Accidently missing a credit card payment one time in a year won’t pay much of a toll but repeated late payments can dramatically affect any chances of being approved for any type of future loans. Any kind of collections, judgments, repossessions, or a bankruptcy can cause you from being able to be approved for years.
3. How many and what types of credit do you have and what are your credit card balances? Established credit is better than no credit or bad credit but too many credit card accounts or unsecured debt can have an adverse affect on your credit score. If you do have credit cards, it is not the end of the world, but attempt to keep the balances below 50% of your limit. By doing this, the credit cards can actually help you maintain a good credit score. 
4. Have you had numerous inquiries in a short period of time? It is more of a myth that the second your credit is pulled your score will drop. Companies that monitor your credit have to check your credit frequently but that doesn’t hurt your score. On the other hand, if you apply for numerous different types of credit in a short period of time, you can see a two to five point drop every time your credit is pulled. The biggest example of this is when you go to purchase an auto. It is a good idea to have financing already set up because car dealers tend to blast your credit out to several banks at once resulting in tons of inquiries causing your score to drop. 

Your credit also takes other things into account that can play a minor role on your score, but still can affect it. Some scoring models will consider your occupation, length of employment, or whether you are a home owner or not.

In summary, to maintain a good credit score, concentrate on making sure your bills are always paid on time or early, keep your balances on cards as low as you can, and always be smart when buying new things and how often you apply for credit. Remember, credit scores drop dramatically faster than they rise.