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Improve your credit score the right way

June 4, 2008

I’ve already covered why it’s important to have a good credit score. Now I’d like to address how to improve your credit score.

The very first thing to do is get a copy of your credit report if you haven’t already done so. You can do this by visiting www.annualcreditreport.com.

Make sure there are no errors on your credit report. If you see anything that is an error, get it corrected. Errors could include something as minor as an incorrect address that probably won’t impact your credit score, or could be something as major as a case of identity theft where someone used your name to open up new credit. You will see instructions on the web site to tell you how to go about getting an error corrected.

The next, and one of the most important steps, is to pay everything on time. I repeat, pay everything on time!

Also if you have any accounts, especially a revolving account like a credit card with a high balance, pay it down. Part of your credit score is determined by how much credit you have available and how much you are using. If you have a credit card with a limit of $10,000 and you are using $8,000 of that balance, it doesn’t look so good. You should aim for using roughly 30 percent or less of your available credit.

If you have a credit card with a good history that you’ve paid off, don’t cancel it. Go ahead and cut it up and don’t use it again, but don’t cancel it. It is important to retain accounts that you have paid on time to establish and keep your credit history. And, cancelling the account will also reduce your available amount of credit compared to how much you’ve used.

Please note: You should not go out and open new accounts just to increase your available amount of credit. Suddenly opening a bunch of new accounts could adversely affect your score.

Another important issue regarding credit reports and scores is that of companies that claim to do “credit repair.” No one can “fix” your credit report if it is accurate. The only way to improve your credit score is by paying your bills on time, paying down your debt and achieving a healthy blend of secured and unsecured debt.

If there are errors on your credit report, most often you can have the errors corrected on your own. You don’t need to pay a company to correct it for you.

Check out www.myfico.com for even more information about credit scores.

Written by admin · Filed Under Misc., Debt 

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