When you are trying to obtain a critical loan, a bad credit score might come as a stumbling block. Some lenders do not approve loans for borrowers with a bad credit score. There are others who might impose an exorbitant interest rate for the loan, in case of a poor credit score. Knowing how to improve a bad credit score can, therefore, improve the loan approval rates.

Here are some effective tips on how to improve a bad credit score:

Understand Your Credit Score
There are several free tools that help you calculate your credit score. In case you have been facing too many rejections from lenders, citing a bad credit score as a reason, paying for a detailed credit score report can also be useful. The detailed report will help you understand what made your credit score sway to the bad side.

Try Slowly Clearing Your Debts
Make sure that you focus on regular payment of your loan installments. For all those who are learning how to improve a bad credit score, clearing off the debts one by one would be the strongest recommendation. It is one of the steps that gives a drastic boost to your credit score.

Ensure Timely Bill Payments
Missed payments can pile up and lead to a bad credit history. It is never too late to repair your credit by starting timely payment of your bills. On-time credit card bill payments can result in better credit scores. Paying the credit card bill without dues every single month can lead to a better credit standing.

Limit Your Credit Utilization
Every credit card you own comes with a credit card limit that is fixed based on your existing credit reports, income and other factors. The credit utilization ratio indicates the percentage of credit that you have utilized. This is calculated on the  basis of your credit balance and credit limits. A higher value here leads to a bad credit score. So, for people with a bad credit score, what really helps is to clear as many credit card balances as possible, without actually closing any of the credit cards. This keeps the credit limit at the same level, but brings down the balance and eventually brings your credit utilization ratio down.

Credit Builder Programs
If nothing else works, there is a diversity of credit builder programs that you can choose from. There are also some banks that offer credit builder loans tailored to give people with a bad credit score a fresh start. This involves regular payments of a fixed amount into a defined savings account. Here, it is all about timely repayments to fix a bad credit score.

With all these ideas on how to improve a bad credit score, you can steadily improve your credit score. Continuing to pay the bills on time and preventing debt accumulation are the ways in which you can maintain the improved credit score.