How you handle your credit cards and other loans affects your creditworthiness. Remember to use your credit responsibly and be sensitive to the terms of the payment agreements you made when you established your accounts. Whether you choose to pay the total outstanding balance on your bills each month or just the minimum payment due, your payment must reach the financial institution or business by the payment due date. Your payment due date is typically within two or three days of the same time every month. If that time of the month is not convenient because it doesn't coincide with your paychecks, contact the creditor to see if your billing cycle can be changed. Or, adjust your budget accordingly.

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8 Steps to improve your credit

1.  Pay Your Bills on Time

Make it your personal goal to pay your credit and other obligations on time and for the required amount each month.

Debt obligations will include:

- credit card charges- loan payments- rent or mortgage payments- utility bills- service or product bills- taxes, etc.

Take advantage of automatic payments and other online bill payment options offered by lenders and credit card issuers. This will ensure timely payments each and every month.

If you forget to make a payment, act promptly on any notices of non or late payment. Call the bill servicer to notify them that your payment will be sent immediately. If you act fast enough, this negative infraction may not be reported to credit agencies.

Make sure you do not ignore any creditor notices of non-payment. Contact the creditor to fix the problem as soon as possible. Even if you have already incurred penalties, you may be able to get the creditor to remove or correct these issues.

2.  Build Strong Payment Patterns

Adverse conditions such as late or non-payments are two of the most common items reported to credit agencies. You can start building strong payment patterns by making on-time payments each and every month.

Your credit report will also list all open credit cards and loans, listing the amount borrowed and the amount owned on the account. Your objective is to build a pattern where you payoff large credit card balances in full each month. This pattern conveys a sense of responsibility for your debt obligations.

Another way you can build strong payment patterns is by charging everyday living expenses on your credit card, deducting the charge from your checking / savings account, and then paying off the monthly credit card charge in full each month.

Important Note: Please follow these rules before you use this method:

- You must set aside funds for every credit card purchase you make

- You must pay your credit card balance in full each month


- You must have an existing credit line or home equity line (with lower interest rate) to finance large ticket items-- never finance purchases with your credit cards.

3.  Maintain only a Few Credit Cards

As your credit rating improves, you will soon receive pre-approved offers from credit card companies and lenders with attractive rates and programs. You should limit your credit to 3-4 cards maximum. Maintaining a large collection of cards can hurt your credit rating.

4.  Close All Retail and Gas Cards

Since you maintain 3-4 credit cards (VISA, MasterCard, Discover, American Express, or other), it isn't necessary to hold onto gasoline cards, retail store cards, and other specialized credit cards. Again, holding multiple cards can drag down your credit score.

5.  Don't Have Too Many Outstanding Loans

Excessive loan balances (especially loans that exceed your Debt-to-Income ratios) can effect your credit rating. Maintaining a good credit rating requires that you reduce your debt holdings by consolidating balances, closing unused credit card accounts, and paying off outstanding loan.

6.  Avoid Charging Close to Your Credit Line Limit

Using your credit up to your maximum credit line balance can impact your credit rating. Maximized credit lines (including home equity lines, credit cards and unsecured credit lines) indicate that you are a consumer who borrows willingly. Many lenders consider this a great risk and may not approve you for additional credit. A good rule to follow is to keep your balances at or below 60 percent of the available credit line.

7.  Review Your Credit Report Annually

About 1-in-4 credit reports have errors. Either a payment on a loan amount has not been recorded correctly or another billing company has posted incorrect non-payment information to your account.

Your credit report also maintains records on your employment, salary, bank accounts, etc., especially the information that you supplied when making previous credit applications. You should review your report annually for errors and make the necessary corrections as instructed by the credit agency. Credit Reports >>>

8.  Limit Inquiries on Your Credit Report

Every time you apply for credit, seek some kind on contractual service, or in some cases employment, a credit inquiry will be made on your report. Multiple inquiries over a short period of time may have a negative impact on your credit score. Models show that multiple inquiries over a period of time indicate an applicant who is anticipating credit problems. So limit credit inquiries when only necessary.

What about having multiple lenders compete for your loan?

Many Internet services and brokers (including lenders on our site) allow you to submit one form and have up to four lenders review your credit information.

Credit agencies understand that these services may require an inquiry by "multiple lenders" at the same time.

These kind of inquiries, coming from multiple lenders within 20-30 days of each other, indicate that you are shopping for the best deal. Credit agencies will count these inquiries as being only one inquiry. This allows you to shop and negotiate best deal without being penalized on your credit report.

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Ideally, your credit report is an accurate, up-to-date reflection of your credit history. However, since we don't live in an ideal world, there are many reasons that your credit report could contain inaccuracies that might prevent you from receiving the credit you deserve. The good news is you can take action to keep your report accurate.

Here are FIVE REASONS why you should review your credit report regularly:

1. Inaccuracies & Mixed Credit Files: Many inaccuracies on a credit report can be the result of simple human error, and are therefore are not difficult to dispute. Whether the inaccuracies relate to payments not credited, late payments, or data mixed in from the credit file of someone else with a name similar to yours, you will want to contact the credit bureau to dispute inaccurate information promptly.
   
   
2. Tracking & Payments: One of the most important elements of credit is a demonstrated history of on time payments. Once you send the check though, anything can happen--a delay in the payment being received can kick you over to a 30-day delinquency. This has a negative affect on your credit, and creditors don't take it lightly. If you call your creditor and explain the situation, they might adjust the info, but you need your credit report to know whether you have a delinquency or not.
   
   
3. Identity Theft: This issue alone is reason to order your credit report immediately. Identity theft is an insidious crime, involving a thief who assumes your name to open new accounts, divert your card statements to another address, and run up all sorts of bad debt without you ever knowing about it until collectors come calling. The best way to catch a thief who is using your name is by getting a copy of your credit report, which will show you if there are accounts listed you know you haven't opened. For example, if a thief has intercepted a pre-approved credit card offer in your name and sent it in with a change of address, your credit report will include the account.
   
   
4. Inquiries: If you're shopping around for a loan or more credit, you should know when creditors check your credit, it places an inquiry on your credit report. Inquiries can add up, which is often interpreted as negative by creditors. For this reason, too many inquiries can actually make getting credit more difficult. Moreover, if you didn't authorize someone to look at your credit report and they did, they may have broken the law. Who's been looking at your credit?
   
   
5. Credit Fraud--Unauthorized Charges: Credit fraud involves the theft of your credit card or account number to make unauthorized charges to your account. Though consumers are protected financially from this abuse, other creditors may take note of all this activity and decide to raise your interest rates or refuse to grant you a loan. Ordering your credit report will help you catch new activity on accounts that you haven't been using, or may have closed. When it comes to managing your credit worthiness, your credit report is your best resource. Your credit report gives you the opportunity to manage your credit wisely, while planning your credit strategy for achieving future goals.

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Other Sections:

Credit Basics: Learn about the basics of credit and it's effect torwards your future!   Establish Credit: Learn how to get your credit started and improve your finances!   Security / Fraud: Avoid common mistakes and protect yourself from identity thieves!   Credit Reports: Everything you need to know about credit reports and credit scores!   Credit Resources: Find other helpful credit resources to assist you with your finances!