Improving your credit score is not rocket science. What it takes is discipline. Most people don’t set out to ruin their credit score, they simply do not pay enough attention to their finances to make it into the upper levels of credit scores. Let’s change that. Here are the steps you need to take in order to improve your credit score:

Assess your income

If you are employed full-time and do not have other income, this one is easy, but if you are self-employed, you should take a good look at your current contracts. Is the income from last year’s tax return a good indicator for this year’s earnings? Have things changed? If your income varies in any way, for example from commissions, reevaluate your assessment every 3 months, so you can adjust your spending and savings. You cannot make a realistic budget without knowing your intake.

Figure out your expenses

We are trying to determine how to get a high credit score. Generally, if you can show that you are living within your means, your score will go up. Are you? Add up all of your monthly expenses and compare it to your income. If you are spending more than you are earning, you need to cut your spending now. You cannot improve your credit score by going further into debt.

Make a schedule

One of the data items credit institutions look at are any late payments. If you have trouble mailing your bill payments on time, make a schedule that lists all bills a week before they are generally due. Look at your schedule every day and mail whichever payment is listed on your schedule. Technology has provided us with another great tool for paying bills. Most utility companies and creditors now offer online bill paying which allows for automatic bill paying when the bill is due. All you have to do is make sure you have enough money in your account for the electronic check to clear.

Check your credit report for open accounts you no longer use

Credit institutions look at the amount of credit you have available and the amount you are currently using. If you have an excessive amount of credit already available to you, you may not be approved for additional credit.

You can request a free credit report at www.annualcreditreport.com. By law you are entitled to a free credit report from each of the three credit reporting agencies every year. Try to keep the amount of credit you use below 50% of the credit that is available to you. Generally, the lower the percentage, the higher the credit score.

If you discover accounts on your report that are still listed, but that you no longer use, write to the credit institution you have the account with to close it. Most credit institutions will only close accounts if they receive the request in writing. Inactive accounts don’t do you any good.

Look at the type of accounts you have

You are better off with unsecured credit cards than prepaid or secured credit cards. So if you have both and they are all in good standing, cancel the prepaid or secured ones before the unsecured ones. Unsecured credit cards are only offered to people that are considered an acceptable risk. Prove your worthiness.

Add up your outstanding debt and create a budget to reduce it

You have probably heard the statement that the people that can get the credit are the ones that don’t need it. Join them. Reduce your outstanding debt. Your credit score will go up, because you now have more ability to take on new debt and have shown responsible money management.

Check any past collection action in your credit report for accuracy and correct if necessary

You cannot eliminate past collection action from your credit report if it is accurate unless it fall under a time limit. Check your individual state for time limits on collection and bankruptcy actions. However, if you have outstanding debt that you are struggling to pay off, you can help maintain your credit score by working out a settlement agreement with the creditor that includes an agreement that the creditor will not add details to your credit report once the debt has been settled and you report it as settled. You don’t want your credit report to show that you settled your debt for a lower amount if it can be avoided, so you don’t scare away future creditors.