Improving credit scores, that are calculated by the three credit bureaus, is possible provided one is aware of the factors that are taken into account while computing credit scores. Credit bureaus, viz. Equifax, Experian and TransUnion allocate weights to the following factors in order to determine the consumer's credit score: payment history (35%), current level of indebtedness (30%), length of the credit history (15%), types of available credit (15%) and frequency of availing new credit (5%). Every individual has three credit ratings at any given point in time. It's evident that paying off dues and using less credit will help one redeem one's credit score since these factors constitute nearly 65% of the score. Simple Ways to Improve Credit Scores To get an idea about where you stand in terms of your credit record, get a copy from any one of the credit bureaus. Here are some of the simplest ways in which you can raise your credit score. Paying Off the Balance on the Credit Card Credit cards have a revolving credit structure that allows people to make minimum payments, based on the amount of credit availed and the interest accumulated on the borrowed sum. The facility of making minimum payments can contribute towards lower credit scores since the balance, that remains on the credit card, after each billing cycle, is reported to the credit bureaus. Hence, a person should try paying off the entire amount, that is due on the credit card or at the least, keep the balance below 30% of the credit limit. Thus, clearing out your credit card debt on time, would go a long way in boosting your credit score. Discharging Credit Card Debts Punctually Even if one is unable to pay off the entire balance on the credit card, timely minimum payments are a must since adverse payment history that comprises 35 percent of the score can render a huge blow to the consumer's creditworthiness. So if you can't clear off the debt entirely, pay as much as you can, every month. Avoid Canceling Lines of Credit Many times, people cancel credit cards with the hope of curtailing excessive spending. The credit utilization ratio, which is defined as the ratio between the total outstanding balance and the total amount of available credit, increases since the numerator remains the same while the denominator falls. Since a higher credit utilization ratio results in a lower credit score, it would be sensible to retain old cards, use those for small purchases and pay off the balance during every billing cycle. To put it simply, be balanced in your credit card usage. Economical usage of credit lines and maintenance of a low credit utilization ratio contributes to a good credit score. Limiting Inquiries On applying for credit cards, the lenders can demand a copy of the borrower's credit report from one of the three credit bureaus. These are listed as credit inquiries that can count against a person's FICO score. Renting a car with a debit card, applying for a number of new credit cards, and shopping around for the best rate on mortgage and car loans result in credit inquiries that lower a person's credit score. Hence, one should try and limit the number of inquiries. Fortunately, multiple inquiries by auto, mortgage and student loan providers within a period of 45 days are clubbed together and treated as one inquiry. Increasing the Credit Limit Requesting the lenders to increase the credit limit on the credit cards may result in increasing the amount of available credit. This in turn lowers the credit utilization ratio. A lower credit utilization ratio helps in improving the credit score. Paying Off Debts Using HEL Using a home equity loan (HEL), to pay off debts is better than using the credit card since any revolving credit balance impacts the credit score more than a home equity loan. That's because credit card debt burden builds up very fast and impacts the credit score quite adversely. Contesting Errors on the Credit Report Finally, one should obtain a copy of the credit report, from the credit bureaus, and ensure the accuracy of the information. People have the right to contest any incorrect information contained in their credit report. Keep Outstanding Debt to a Minimum The main point to keep your outstanding debt, down to a minimum and maintain a consistently good financial record. Automatically, your creditworthiness and credit score will be raised higher. It's important to note that good credit score is imperative for seeking loans at a favorable rate of interest. Obtaining a home mortgage loan, a car loan or even a private student loan is contingent to a person having good credit scores.