Improve Payment History

• When mortgage lenders or banks review your credit report to determine whether you qualify for financing, they'll take many factors into account. They'll access your three-digit FICO score, and they'll closely review your accounts to see whether you have late or missed payments. Your payment history reveals your level of responsibility. And if you want to get on a lender's good side, you've got to pay your bills on time--on or before the due date. Granted, unexpected events occur, and you may not have money to pay a creditor. Rather than skip a payment, contact the creditor and ask for help. The creditor may temporarily suspend payments or extend your due date.
  
  

Debt-to-Income Ratio

• If your total debt payments exceed or come close to exceeding your income, you'll likely notice a credit score drop. Even if you can afford your minimum payments, excessive debts damage your personal rating, and future lenders may not extend additional lines of credit. You can easily remove bad credit and raise your FICO score by eliminating debts and keeping your credit card balances low. Stop spending money frivolously and use your disposable income to pay back creditors. Find ways to make additional income. Get a better-paying job, look for an online opportunity or auction off personal belongings.
  
  

Start Over and Re-establish Credit

• Removing bad credit may involve opening a new line of credit and rebuilding your history. This is often the case after a bankruptcy. Since you're not likely to qualify for a loan with a low score, contact your bank and inquire about secured credit cards. Anyone qualifies for these types of credit cards. And with each passing month, you'll gradually add points to your credit score--if you adopt better credit habits. Secured credit cards typically feature low limits, and applicants are required to pay a security deposit.