It is nice to have the bragging rights that come with having a high credit score, but there are other reasons you should do all that you can to improve your credit rating. Your credit score is an important aspect of your life, and one that can impact several areas of day-to-day living.credit-score (1)

It’s no secret that our credit scores are closely scrutinized for everything from applying for a new job to getting a new insurance policy. If your credit score is low, you may be suffering from the effects of bad credit without even being aware of it.

If you are on a mission to rebuild your credit score, it is important to be armed with the information you need to meet your goals. It all starts with pulling your credit report. But there’s more to your credit rebuilding master plan that you need to know about. Here are the things you need to do to take a day-by-day approach to improving your credit score.

Start off by Assessing the Situation

Once you have your credit report, take a look at the details to see if there are any errors. If you find errors, work with the credit reporting bureau and any creditors involved to get those issues resolved. You should also take a look at your credit score. If your FICO score is lower than 620, many creditors will consider you to have subprime credit. This means that immediate actions must be taken – and sometimes repeated – to improve your credit score. Don’t get discouraged if your credit score is lower than you thought, as there is no such thing as having a score so low that it cannot improve.

Open a Line of Credit

If you don’t have a credit card, getting one can be tricky. Thankfully, though, there are things that you can do to work toward opening your first credit card, or getting a new one if your credit score is low. Start off small by applying for a store or retail credit card. These types of cards are easier to qualify for and making timely payments improves your credit score, little by little, every month.

You may also want to apply for a small loan at your local bank branch. Be prepared to get turned down, but do your best to apply for a small loan. Your goal right now is to show that you are a responsible person and that you pay your bills on time every month. You can’t do that unless you are regularly paying on loans and/or lines of credit, so you will have to bite the bullet and see if you can qualify for small dollar loans or lines of credit to get the ball rolling in the right direction.

Avoid the Temptation to Have too Many Credit Cards

There are people who go overboard and end up opening too many lines of credit. Remember, your credit score is calculated via five different factors: payment history, total debt amount, length of time you have had credit, the types of credit you possess and recent credit card activity. Your payment history and total debt amount added together account for 65 percent of your credit score. Reducing your credit card balances and maintaining a spotless payment history will do a world of good when it comes to improving your credit score.

A great credit score doesn’t just happen overnight. You have to take matters into your own hands. Making smart financial decisions can take practice, but before too long it becomes a habit – something you do day in and day out. That habit will ultimately increase your credit score.