How to Improve Your Credit Score

 

Your weight. Your credit score. What does one have to do with the other? Turns out, if you’re like most people, you’re more ashamed to reveal the latter digits, according to a recent study by National Foundation for Credit Counseling. The good news is that just as you can take steps to manage your weight, you can also improve your credit score by following a few simple guidelines.

 

Get your report. Why? You always pay on time. But that doesn’t necessarily mean your credit score is excellent. Be sure to actually check your ratings. Visit AnnualCreditreport.com, where each of the reporting bureaus—Experian, Equifax, and TransUnion—must legally offer you one free report per year. Unless you suspect fraud, it’s a good idea to request a report every four months from a different bureau. Credit scores can range from 350 to 850, and while there’s no solid rule on this, you should be OK above 700. Anything below 650 means you’ve got a lot of fixing to do.

 

Check for errors. Look over the report carefully for misspelled names, credit cards you don’t have, inaccurate debts. If you see any mistakes, relax, it may just be that, a mistake. Identity theft is less likely than simple slip-ups by the reporting companies. Importantly, ensure that your actual credit-card limits reflect accurately in the report. Otherwise, it will seem like you’re always on the precipice of debt default. And if you do discover blunders, contact the credit bureau to file a dispute.

 

Use your credit card. But use it wisely. Letting it sit idly in your wallet won’t help; neither will racking up debt. Nothing slashes a credit score like an adult who spends like an irresponsible teen. Moreover, since 30% of your score is based on how much you currently owe, you ideally don’t want to charge more than one-third of your credit-card limit on each card, even if you pay in full each month. Of course, life is not cheap. So if you have regularly high expenses, ask your credit-card company to raise your limit.

 

Pay down debt. If you have the cash, this tip seems obvious, but depending on the type and cause of the debt, even after you pay it off, it can take from several months to seven years for the record to disappear. To speed things along, ask the creditor to remove the debt or an account that went to a collection agency. If that fails, try to get the creditor to mark the account “paid as agreed.”

 

Pay on time. Again, this is obvious, just as it is obviously often ignored. If you can’t remember to pay your bills by their due dates, sign up for email reminders and automatic payments. Given that 35% of your credit score relies on your payment history, you can’t afford to mess this up.

 

Finally, remember that as with weight management, it takes time to see results. If you follow these steps and spend wisely, you’ll eventually see your credit score go up.


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