8 Easy Steps to Improve Your Credit Score

Find Out What's In Your Credit Report

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So you don't have a perfect credit score? Don't worry, there's hope. You can improve your credit score, and here's how:

  1. Time
    This one's so easy, you don't actually have to do anything! The older your credit file, the more stable it will be. If you have a proven, positive credit history, lenders will feel more comfortable extending credit. Your credit report is an ever-changing document: every time you use credit or make a payment, your credit profile and score change. That means, even if you have flaws in your credit history, they will disappear over time. Focus on handling your credit accounts in a positive manner and over time your credit report and score will improve;

  2. Keep Your Debt Load as Low as Possible
    Pay your debts down! People with a lot of debt pose a greater risk than those with less debt (regardless of payment history). "Revolving Utilization" is the amount of available credit you're using on your revolving credit lines (like credit cards) -- the higher the percentage, the lower your credit score. You want to keep your revolving utilization as low as possible, while paying down installment loans (like home or car loans) by making extra payments;

  3. Don't Apply for Multiple Credit Accounts in a Short Time
    Every time you apply for credit, the lender "inquires" about your credit history to at least one of the three major credit bureaus. Too many inquiries in a short time-span can lower your credit score;

  4. Don't Close Old Accounts
    Even if you haven't used an account for a time, leave it alone; it will only help your credit score. The longer your positive track record, the better risk you are, and the higher credit score you'll have;

  5. Use the Right Kind of Credit
    Don't use finance companies. These would include store credit card accounts and payday loans. Generally, they not only charge much higher interest, but just doing business with "high risk" lenders like these can actually lower your credit score! Stick with major credit cards and bank loans. Speaking of bank loans, buy a house; it's an appreciating asset that equates to stability (thus lower credit risk). Also, make sure you're getting credit for your great credit. Believe it or not, some lenders don't report your account to the credit bureaus; so, be sure to ask that they do;

  6. Separate Accounts After Divorce or Death of a Spouse
    Don't let your ex-spouse's terrible credit drag you down. If you were relieved of debt obligations in the divorce decree, make sure to follow up with all three major credit bureaus. Additionally, upon the death of a spouse, remove any of their debts for which you are not responsible from your credit report;

  7. Correct Mistakes on Your Credit Report
    It is so important to check your credit report from each of the three bureaus. You may find inconsistent or inaccurate information on one, two, or all three reports. Usually, the error will not be in your favor. Correct any mistakes and your credit score will improve;

  8. Pay Your Bills On Time!
    This is the single most important (and easiest) thing you can do to build and maintain an outstanding credit score. Even if you can't pay your entire minimum payment, send something; then follow up with a phone call to the lender, and explain the situation -- this demonstrates good faith, and creditors like that. If you absolutely can't make a payment, call the creditor anyway. They are usually very willing to work with you (and may even delay reporting the delinquency to the credit bureaus);

Simply follow these eight simple guidelines and you'll be well on your way to credit score nirvana!