Whether you’re fixing your credit on your own or you’re relying on someone else to do it, the main thing you’re going to keep your eye on is your FICO score.  I’m sure by now that if you’re fixing your credit, you’re going to be paying attention to this score.  This score will determine what kind of loan rates you’re going to get in the future as well as credit card offers.  Having a higher credit score can save you thousands of dollars annually on a mortgage loan alone.

If you’re unsure of what goes into your FICO score, I’m going to break it down into a few sections that matter.  These sections are what causes your score to either rise or steadily decline.  It’s your mission to make sure that these categories are taken care so that your score can actively rise.

Your payment history – This is probably the most important one out of them all.  Your payment history will basically show you how many payments you’ve made in the past on certain accounts, how many times you were late, how many times you didn’t pay, etc.  Make sure that you pay your bills on time and make at least the minimum payment.  Doing this alone for months on end will show an increase with your score.

How old are your accounts?  The older your accounts are, the more it’s going to show the credit companies are reliable you are.   If you’ve had credit accounts opened for 9 years and out of those 8 years, you’ve been late 99% of the time, they are only going to assume you’re going to keep that pattern up.  If you’re still relatively young to the credit game, your length won’t matter as much.   Generally, the older the accounts that are in good standing, the more this will help your credit score.

How much do you owe?  The more you owe, the more your credit line dissolves.  If you make $40,000 a year and you have credit cards totalling over $50,000, there’s something wrong with the picture.  Your debt to income ratio should be fairly small because creditors won’t lend to you if you have a lot of debt.  Pay off that debt and you’ll see a slight increase over time.

New credit – A smaller factor that sometimes plays a role with credit is that when you start to open up a lot of new accounts all at one, credit card companies start to get suspicious thinking you’re in some sort of financial trouble.  Some say opening a lot of new credit accounts hurt you, some don’t.  Just make sure you don’t open up 10 accounts all in one day.

Your FICO score doesn’t rise overnight.  There are a few simple tips you can follow to ensure you that your score rises.  Pay your bills off, pay them on time and always pay the minimum.  Do this month after month and your score will be where you want it to be in no time.