Pay your Bills on time. This one seems like common sense, right? Well it's actually the one most people mess up This factor can account for up to 35% of your credit score. Having paid your bills on time in the past is a good indicator that you will do so in the future. Rebuilding your credit may seem like a daunting, time-consuming task, and in many ways it is, but with this step, you can regain control and effectively raise your score.

Correct errors on your credit report. This is another simple way to start improving your credit score. Each year you are allowed one free credit report from the three major reporting authorities. Take advantage of this opportunity and scrutinize your report for any errors. If you find any, you can initiate a dispute on the following web sites:

TransUnion: www.tuc.com

Equifax: www.equifax.com

Experian: www.experian.com

Control your Credit Card Debt. Although credit cards are an important step in establishing your credit history, it is detrimental to your credit score to carry balances that account for more than 25% to 35% of your total credit line. For example, let's say you have a credit card with a $10,000 limit. Once you exceed a balance of $2,500 to $3,500, your credit score is adversely affected. For this reason it is not always advisable to consolidate credit card debt onto one low interest card. Many people credit card hop their debt from one zero interest card to the next, often unknowingly harming their credit score. Depending on your particular situation, it might be better to spread your debt over a few low interest cards.

Don't Close Unused Accounts. If your accounts are clean, then the older they are, the better they are for your score. A portion of your credit score is tabulated by taking an average age of your lines of credit. If you don't use an account, just forget about it and let it raise your score for years to come.

Minimize Inquiries. There are two types of inquiries that are recorded on your credit report. “Soft” inquiries are initiated by you, through the major reporting authorities, and do not hurt your score. “Hard” inquiries are those initiated by businesses, such as lenders, when you request credit. These are the type that slightly lower your credit score. This is why it is important to only apply for credit when credit is needed and not to open many accounts in a short period of time. It is probably a good idea to limit both types of inquiries, but definitely limit those of the “hard” variety.

There is a great deal more you can do, however I believe these are key to a good credit score. Obviously you want to avoid bankruptcy. It will kill a credit score for up to 10 years. But to achieve a decent score, these guidelines should be followed. I am a young adult whose credit history is not that extensive. I have mostly followed these steps, and I have a score of around 700 and have secured two concurrent mortgages. If I were pressed, I would say the most important of these steps is paying your bills on time

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