How to Improve Your Credit Score
First, you can get a free copy of your credit report at www.annualcreditreport.com.
This won't have any negative effect on your credit score. You won't get
your credit score but you'll be able to identify any incorrect
Your credit score contains both positive and negative
information. Making payments on time will raise your score and
making payments late will lower your score.
Your credit score considers 5 general categories:
Payment history (about 35% of your score), to improve your score
you should: pay your bills on time, if you've missed payments you
need to get current and stay current. If you have any accounts
in collection, you'll need to pay them off.
Amounts owed (about 30% of your score), to improve your score you
should: lower balances on credit cards, pay off debt rather
than moving it around, Don't close unused credit cards,
Don't open new credit cards to increase your available
Length of credit history (about 15% of your score), don't
open many new accounts rapidly. It will lower your average
account age and will look risky if you are a new credit user.
New credit and credit inquiries (about 10% of your score), if you
are shopping for an auto loan or a mortgage do it within a short
period of time (14 days). If you've had problems you should
re-establish credit, use it responsibly and pay on time. It's
ok to check your own credit report and credit score without lowering
Types of credit in use (about 10% of your score), only open new
accounts as needed, have credit cards but use them responsibly.
How fast does your credit score change? Monthly! Big
changes won't occur from one month to the next, but over any given 3
month period about one person in four has a 20 point change in their
If you want more information, get this document from myfico.com.
|> Balance transfers
|If you want to use balance
transfers, you won't want to close your old credit card.
It can shorten average account age.
If you must, transfer the balance and leave your old card
account open (but don't use it). Then once you pay off the
card you transferred the balance to (the newer one), you can
close that account and go back to your old one.
|> New credit when looking
to buy a home
|Avoid opening any new accounts
when you're applying for a mortgage.
The payments will count against the total amount of payment
that you can afford and the double whammy is that it'll lower
your credit score.
Save buying furniture and that new big screen TV until after
the closing, your credit score will be pulled again within the
last week or two before the closing to make sure things have
remained the same.