Steps To Boost Your Credit Score
- Correct all inaccuracies on your credit report. Go through your credit reports very carefully, looking for late payments, charge-offs, collections, or other harmful items that aren't yours. • Note accounts listed as "settled," "paid derogatory," "paid charge-off," or anything other than "current" or "paid as agreed" if you paid on time and in full.
- Same goes for any accounts included in bankruptcy that still lists as unpaid and any negative items older than seven years (10 in the case of bankruptcy) that should have automatically fallen off your report. Get rid of negative items • Also, make sure to remove any duplicate collection notices listed (for example, one from the creditor and one from the collections agency).
- Make sure that your good credit lines reflect on your Credit Reports. This approach may seem bizarre, but often (to make you less desirable to their competitors), creditors will show you as having less available credit than you have. If you see this on your credit report, bring this to their attention. If you have bankruptcies that should be showing a zero balance, make sure they reflect a zero balance! The creditor will often not report a "bankruptcy charge-off" as a zero balance until appropriately disputed.
- If you have any negative marks on your credit report, negotiate with the creditor/lender to remove them. If you are a long-time customer with something simple like a one-time late payment, a creditor will often wipe it away to keep you a loyal customer.
- If you have severe adverse reports like overdue bills that have gone into collections, negotiate a payment to remove the negative item. Do not pay off a bill that has gone to collections unless the creditor agrees in writing that they will remove the derogatory item from your credit report. Also: never admit that the debt gone into collections is yours. Admission of debt can restart the statute of limitations and may enable the creditor to sue you.
- Pay all credit cards and any revolving credit down to below 30% of the available credit line. The scoring system wants to make sure you aren't overextended, but at the same time, they want to see that you do indeed use your credit. 30% of the available credit line seems to be the magic "balance vs. credit line" ratio to have.
- For example, if you have a credit card with a $10,000 credit line, make sure that your balance is never more than $3000 (even if you pay your account off in full each month). You can also try asking your long-time creditors if they will raise your credit line without checking your FICO score or your credit report. Tell them that you're shopping for a house and you can't afford to have any hits on your credit report.
Do not close your old credit card accounts. Old established credit accounts show positive history and testify to your stability and good payment habits. Cut up the cards if you don't want to use them, but keep the accounts open.
- Avoid applying for new credit. Each time you apply for new credit, your credit report gets dinged with an inquiry. New credit cards will not help your credit score, and a credit account less than one-year-old may hurt your credit score. Use your cards and credit as little as possible until the next credit scoring.
- Have at least three revolving credit lines and one active (or paid) installment loan listed on your Credit Report. The scoring system wants to see that you maintain a variety of credit accounts. It also wants to know that you have at least three revolving credit lines - so make sure you do.
- If you have poor credit and are denied a typical credit card, you might want to set up a "secured credit card" account. Secured cards require you to make a deposit equal to or more than your limit, which guarantees the bank that you will repay the loan. It's an excellent way to establish credit. Installment loans, car loans, furniture/appliance loans, or mortgages (best of all) qualify. While Pursuing this process, remember: It takes up to 30 days for these things to get reported and sometimes another 30 days to reflect on your credit history report.