After a few credit mistakes, getting your credit score back up to a point where you can qualify for good rates on loans is a difficult chore. Often, it can take years to get your score back up to where you want it to be after major mistakes such as bankruptcy or car repossession. Fortunately, there are ways to start improving your credit that can speed up the process of credit repair. In fact, many people are surprised to discover that a credit card can help them to improve their credit score.

The bureaus that compute credit scores tend to keep their exact formulas an industry secret, but there are a lot of people who have made some good guesses about how they are computed. Factors such as the length of your credit history are important, but the majority of your score depends on how often you pay your bills on time and how much credit you have been extended by other banks.

Pay Your Bills on Time

When you’re trying to improve your credit score, one of the best things you can do is pay your bills on time. This includes utility bills, loans, and credit cards. Simply making the minimum payment on your credit cards by the due date each month ensures that points won’t be deducted from your score. As time passes, past credit mistakes will fall off of your report, and the lack of other bad information will cause your score to go up.

It is important to note, however, that paying your credit card bill on time will not increase your score quickly. Paying your bills on time will typically improve your score slightly every year. If you need to improve it faster, you’ll need to focus on other ways of improving your credit.

Understand Credit Extended to Credit Used Ratio

Banks are more likely to trust people who have already had credit extended to them, so a big part of your credit score is based on how much credit banks have given you and how much you have already used. A new credit card, even if it has a small credit limit, increases your credit score because it increases the overall amount of credit that a bank has given to you.

Of course, the trick is to not use all of your available credit. In fact, many financial experts believe that using about 20% of your available credit is the upper limit of what you want to spend. This shows lenders that you are only using a small portion of the credit that other banks believe you deserve.

As an added bonus, as your score slowly increases from your higher available credit line and your on-time payments, you’ll probably see an increase in the amount of available credit you have on your credit cards. As your credit limit increases, your credit score will continue to increase, allowing you to repair your credit even faster.