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Your credit score can be the magic figure that will either swing you in favor of easy monthly payments or loan sharks. If you have chalked up a poor credit score for any number of reasons, what are the options ahead of you? How can you repair your credit score? Find out answers to these and more.

Understanding your credit scores

FICO score of 700 and more - Excellent credit

FICO score of 680 to 700 - Good credit

FICO score of 620 to 680 - Ok credit

FICO score of 580 to 619 - Low credit rating

Your credit score is a factor of your payment history, length of credit history, new credit accounts and types of credit in use. Credit scores less than 500 herald trouble for you. You need to have a high score, in the range of 575 and 650 for creditors to see you as a good risk for them to loan money to.

If your score is in low 500 range or even as low as 400, then you need to start taking steps to repair credit scores. If a consumer notices that his credit score is erroneous, he can tell the consumer-reporting agency of the inaccuracy. This should be accompanied by documents to support the position. This sets into motion an investigation and you are entitled to a free copy of your report.

Repair credit score

If you are seeking the services of a credit repair agency, check the guidelines from the Credit Repair Organizations Act before you enter an agreement. Ensure that you are not gypped into paying for credit repair services up front or dragged into a legal dispute that all your credit score information is erroneous. Never agree to get a new credit identity, as it is a federal and state felony.

• Pay your bills on time. Payment history is probably one of the important deciding factors for your credit score. Rebuild your credit score by making on-time payments. Missing even one payment can knock 50 to 100 points off a good score.
  
  
• Keep your credit card balance in check. Keep the gap between your revolving credit and how much you are using low.
  
  
• Pay off debts rather than transferring it elsewhere. The more debt you pay the better your credit score.
  
  
• Don't close old, paid-off accounts. When you shut down your old credit accounts, it makes the credit balances loom larger in calculation of credit scores. The length of your reported credit history is shortened thereby making you appear credit unworthy.
  
  
• Bankruptcy can knock 200 points, or more, off your credit score. This can particularly hurt those with otherwise good credit. Stay out of bankruptcy if you can avoid it.
  
  
• Seeking counseling from a consumer credit agency can help you set up a reasonable debt repayment plan. Such an agency can aid in lowering your interest rates and drawing up a plan to repay your outstanding bills. This will not affect your credit score.
  
  
• Do not go on a rampage of applying for credit at many places if you are seeking to repair your credit score. It might work against you. Too many inquiries from lenders can get you penalties.
  
  
• One method of repairing your credit score is to consider a consolidation loan to pay off the outstanding bills and lower your monthly payments. But this will not directly help in leveraging your credit score. With prompt payments over time, you can help rebuild your credit score. You can choose to pay more than the minimum monthly payment to repair your credit score. This will help in clearing your debts earlier and lowering your interest burden.
  

These are the factors considered while calculating your credit score rating:

• Payment history
  
  
• Credit Utilization in comparison to your credit limit
  
  
• Length of credit history
  
  
• Types of Credit
  
  
• Credit Enquiries into your credit profile