| Can you improve your credit score? Yes indeed. Your | | | | into the next smallest debt and pay it off completely. |
| credit score is based on your credit report, which is a | | | | When that is gone you have freed up more money so |
| compilation of several kinds of information about you. | | | | you can make bigger payments on the next smallest |
| From those facts (and often errors!) your credit score | | | | debt. With each debt cleared you have more to put |
| is calculated. You can improve your credit report and | | | | into paying off the next one. When they are all gone |
| credit score in several ways. Some are obvious - | | | | you will have wads of money left over each month. |
| others not so much. | | | | This is called the snowball effect and it is powerful. As |
| 1. DO pay all bills on time, every time. Every bill you do | | | | you pay down your debts bear in mind that credit |
| not pay on time can affect your credit score, while | | | | agencies like it when you use your credit, but not too |
| every bill you do pay on time builds your standing. | | | | much. So as you pay off what you owe, continue |
| 2. DO keep all financial documents. That includes bills, | | | | using the cards a little bit, but only if you can avoid |
| bank and credit card statements, receipts, cancelled | | | | going over 30% of your credit line. |
| checks and so on for the last several years. This | | | | 6. DO minimize the number of inquiries on your credit |
| documentation will help you dispute errors on your | | | | report. Single inquiries (as from new credit applications |
| credit report, including unauthorized charges. If you ever | | | | you make) will not have a big impact, but a number of |
| have to deal with identity theft this information will help | | | | inquiries in a short time period can damage your credit |
| as well. | | | | score. Your own inquiry does not count. You can also |
| 3. DO get your credit reports. You need a credit report | | | | get inquiries removed from your credit report. |
| from each of the major credit bureaus, TransUnion, | | | | 7. DO request a credit limit increase from your credit |
| Experian, and Equifax. They are different companies | | | | card company. To avoid another inquiry on your credit |
| and their credit reports often contain different | | | | report (not big but still a negative) ask for the largest |
| information. Creditors often check all three and | | | | increase they can do without an inquiry. If there have |
| average the credit scores they provide. To comply | | | | been not inquiries for a long time (as you know from |
| with US law, the three sites have set up a website | | | | your credit report) if you could get a big increase it |
| giving you access to your credit reports once each 12 | | | | could be worthwhile. An increase in your credit limit will |
| months at no charge. Credit reports do not include | | | | improve your ratio of available to used credit, but only |
| your credit score but they will offer to sell you your | | | | if you do not use it. If you are maxed out, get more |
| score when you request your free report, probably | | | | credit and then charge against it, you are hurting |
| charging $8-12 each. Requesting your own credit | | | | yourself, so be careful with this one. Get the increase, |
| report does not affect your credit score. | | | | then let it sit there as available, unused credit. That is |
| 4. DO clean up your credit report. Once you have your | | | | how to get a higher credit score. |
| credit reports disputing negative items is the fastest, | | | | 8. DO keep open but unused credit card accounts, |
| easiest way to remove them and directly increase | | | | especially older ones. The longer your average |
| your credit score. How does that work? Credit | | | | account age and credit history the better, so keeping |
| reporting agencies have 30 days to confirm disputed | | | | old but unused accounts open can improve your report |
| items with the original source or they have to remove | | | | in both of those ways. Unused credit also improves |
| them from your credit report. If the item is in error (and | | | | your ratio of used to available credit. You can destroy |
| there are many errors in credit reports), they remove it. | | | | the card itself or put it somewhere safe. If the card is |
| If the paperwork is not completed in time (and this | | | | not secure then of course close the account, and |
| often happens) they remove it as well | | | | likewise if you have too many cards. |
| 5. DO reduce your level of debt. Focus on paying off | | | | 9. DON'T apply for or take on new revolving credit |
| credit cards both because they have high interest | | | | unless you really have to. If you are already maxing |
| rates and because they affect your score a lot. If you | | | | out your available credit then new applications and |
| have memberships or other expenses you can drop | | | | owing more will only hurt your credit score. |
| to lower your bills, consider doing that and applying that | | | | 10. DON'T go bankrupt if there is any possible way. |
| money to paying down debt. One good strategy is to | | | | Bankruptcy can take hundreds of points off your |
| put everything you can into paying off the smallest | | | | credit score and years to overcome. It may be the |
| debt while paying the minimum on all the others. When | | | | only way out of a bad situation, but be very sure |
| the smallest is gone, use the money you were paying | | | | before you do it. |
| on that one to add to the minimum you were putting | | | | |