How do I: Improve my credit score?
Who is affected: CONSUMERS AT EVERY STAGE OF LIFE
DEGREE OF DIFFICULTY: MODERATE
What you'll need: CREDIT REPORTS, CREDIT SCORE
What you need to knowWhen you think of the phrase "credit score," you're probably thinking of a number between 350 and 850. This is your FICO score, and it was developed by the Fair Isaac Corp.
Three major credit bureaus -- Experian, TransUnion and Equifax -- collect the information that makes up your credit history. This information is used to formulate your credit score.
You can improve your credit score through the following steps:
1. Pay your bills on time. It's never too late to start building a good credit history. Paying on time for a few months can improve your score significantly. Make a budget, cutting out any unnecessary spending, and use the extra cash to get current on old bills.
2. Pay down credit card debt. You can improve your credit utilization rate by paying down credit cards and other lines of credit now, starting with any that are maxed out. It goes without saying that if you want to improve your credit score, charging more is not recommended
3. Keep lines of credit and try to increase your limits if possible. Just because you don't want to use your cards doesn't mean you should close the accounts. If self-control is an issue, cut up the cards, but leave the accounts open. Closing cards will shorten your credit history, hurting your score.
You can get a free copy of your credit history by visiting AnnualCreditReport.com, calling (877) 322-8228 or sending a request form to:
Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281.
To get your FICO score, you can go to myFICO.com and, for a nominal fee (currently $15.95), print a copy of your score accompanied by one of your credit reports.
Comb your credit report for any unpaid obligations dragging down your score and call the creditor to resolve the issue and retire the debt. Remember, a late payment is better than none at all. If you're sure you've already paid a debt but it's still on your report, you can challenge it
with the credit bureaus.