With a poor credit score you may have been turned away from a job that you are clearly qualified for. You may have been turned down for a credit card or a car loan. The times you have gotten approved it is with a high down payment and an exorbitant interest rate.



If you know how the credit system works then you can use it to your advantage and increase your credit score. This will save you money that can be used for better purposes than paying high interest rates.

When the credit bureaus calculate your credit score they use an algorithm. They plug in your information including payment history, types of accounts, balances, ect., and then a computer calculates your credit score.

Your credit score is a way for lenders and employers to measure you. Lenders will often not look at any other factor other than your credit score when you apply for a credit line. You credit score determines how the credit world perceives you.

How do you use the credit system to your advantage? There are two factors that carry more weight than anything else in the credit system equation.

1. Delete negative inaccurate accounts. Derogatory credit items do the most damage to your score and should be removed as soon as possible.

2. Maintain an unsecured revolving line of credit. This is an easy technique that almost anyone can do.

The actual credit bureaus algorithms are protected and not released to the public. However upon review of thousands of credit files it has been found that having an open account is almost as important as removing negative credit items.

An unsecured credit line will increase your credit score because:

1. You are creating positive payment history with every month you pay your bill on time. Also credit bureaus like to see that this account has aged. Meaning it has been an open account for a while.

2. Increase your ratio of debt to credit. This is how much credit you have in relation to how much debt you have. You want to be able to show the credit bureaus that you are not using all your available credit.

Your open credit line will carry more influence on your score if it is unsecured. However if you can not be approved for an unsecured loan then I would suggest a secured credit card.

A credit line will help build credit however it is most important to remove bad credit items. If you are unable to get approval for new credit immediately and don't want a secured credit line then remove bad credit and then reapply.

It is possible for everyone to achieve a 700 credit score for themselves. So start today and erase the derogatory marks and build positive marks on your credit report.