How can you improve your credit score?
It's virtually impossible to change your score in the time between when most people decide to buy a home or refinance their mortgage and when they apply. So the short answer is, you really can't "on the spot." But there are strategies you can live with to make sure when you apply for a loan your score is as high as possible.
Make sure that the information each of the three credit reporting bureaus has on you is consistent and up to date. Order a copy of your credit report about once a year, and dispute any inaccuracies.
Note: Theoretically, if a series of credit reports is requested on your behalf (credit inquiries)during a limited amount of time, your score goes down until time passes without any inquiries. Changes in the law though have made "consumer-originating" credit report requests not count so much. Also, a series of requests in relation to getting a mortgage or car loan is not treated the same as a number of credit card requests in a limited time. This is because the credit bureaus, and lenders, realize that people request their own credit reports to keep up with what's on them, and smart consumers shop around for the best mortgage and car loans.
Unsolicited credit card solicitations in the mail might not count against your credit report as a full inquiry, but they do cause your score to suffer and make it easier for someone to open a credit card in your name without you knowing. To stop these solicitations that leave you vulnerbale to identity theft, please read about how you can Opt Out of Credit Pre-screening.
The two main components of your credit score are your payment history and the amounts you owe. Bankruptcy filings and foreclosures, which can stay on your credit report for as long as 10 years, can significantly lower your score. It's never a good idea to take on more credit than you can handle. Read more about how your credit score is calculated...
Additional Credit Maintenance Tips:
The following is a list of general recommendations to follow that will help you maintain and improve your credit ratings:
- Opt out of credit pre-screening; this can benefit your credit scores within 7 to 10 days by as much as 20 points and it will stop all that annoying junk mail you receive advertising bogus offers for credit cards and mortgages
- Avoid maxing out credit limits on credit cards
- Keep credit card balances limited to 30-40% or below the credit limit – establish “personal credit limits” for each credit card that you have
- Make sure and use your “seasoned” or established credit cards, accounts that you have had for several years, at least once every 6 months – this will keep them as active accounts on your credit and give you positive credit history
- Pick three major credit cards that you have had open for several years and use one for monthly gasoline purchases, one for groceries, one for lunches, and one for other – then make payments but keep a balance on these cards
- DO NOT switch all your credit card balances onto one credit card because it offers a low 0% APR - keep your balances evenly disbursed on your other cards as this will give you the highest score ratings
- DO NOT open new lines of credit at department stores to save 10-20% that day, this will create a new credit inquiry on your report, dropping your score instantly by 5 – 10 points, and the addition of a new unrated trade line hurt your score for the next 6-12 months
- If you are currently paying on installment loans, i.e. auto loans, student loans, etc. – do not pay them off early – make the necessary payment for the full term of the loan
- When ever new trade lines are established it will take 6-12 months before those lines are considered “seasoned” or established enough to receive positive ratings
- If creditors charge you a late fee and you are over 30 days late in making the payment, if you pay the late fee then the creditor must remove the 30 day late from your credit report – NEVER HAVE LATE FEES WAIVED
- If you are involved in a bankruptcy, never send your bankruptcy papers to the credit bureaus
- Be sure to access your credit report at least once a year to review for inaccuracies or erroneously reported items. It’s your credit and no one else is going to keep an eye on it for you!
It's said that by carefully managing your credit, it's possible to add as much as 50 points per year to your score.
If you are seeking credit dispute or credit clean up assistance, we offer services that are affordable and provide results within as little as 21-45 days. Long term credit management is available as well as credit education.
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