What are the most recommended ways to improve bad credit?

ANSWER

The BIDaWIZ Team's Answer:

Improving a credit score is done by building a better credit history. The Fair Isaac Corporation offers tips on how to build a credit history.

• FICO scores improve naturally as your credit history gets better over time. You don't need to request a review. Each time your credit score is requested by a lender, your FICO score is recalculated based on the new information reported to the credit bureaus.
   
• Avoid going delinquent on payments. Never let the balance of a bill go over into the next month, and don't let your loans slide into default. Pay all your bills in a timely manner before the payment due date.
• Avoid closing a credit account you don't use, unless there are fees associated with it.
   
• If you do miss a payment, get current on your payments as soon as possible.
• If you're having difficulty making your payments, get in touch with your creditors or a credit counselor to work out payment arrangements. Over time, this can improve your FICO score.
• Reduce your outstanding debt on revolving lines of credit such as credit cards. Keep a low balance. Showing that you pay down your credit cards is a big step toward fixing your credit score.
   
• Don't transfer balances and shuffle debt frequently. This is seen by the credit bureaus as an attempt to fix your credit rating quickly.
   
• Re-establish your credit history. Have credit cards and/or installment loans and pay them off each payment cycle. Again, this is a slow but effective process. Remember, repairing credit isn't a fast process; it takes time.
• Open new accounts that you will use and pay them off on time.
• Avoid opening lots of credit accounts simultaneously or credit accounts you aren't going to use. This is also seen as an attempt to increase your credit score fast.
• Don't get impatient. You'll see your FICO score raised as you demonstrate that you are a low risk to lenders.