How To Improve Your Credit Score

How To Improve Your Credit Score

Having a low credit score can impact your life pretty significantly. From being denied for credit cards, auto loans, jobs, and your dream home.Did you know that only about 11% of the surveyed population ranks above 800; 29% ranks between 750 and 799? That means over 60% of surveyed population have a score of below 750.Where is your credit score at? Would you like to learn how to improve it? Here are some basic tips to give your score a little boast. First make sure you get a copy of each of your credit reports from all three major credit bureaus.
1. Check for and correct errors on your credit report.
Mistakes happen, and you could be paying for someone else’s poor financial management.
2. Pay your bills on time.
Payment history is the single most important factor in determining your credit score, making up 35% of the total. Since recent history carries more weight than what happened five years ago, getting in the habit of making on-time payments is an incredibly powerful way to start rebuilding your credit rating.Delinquent Payments can devastate your score. Missing even one payment can knock 50-100 points off a good score. Skipping payments for a single month on all of your bills can lower your number from a respectable 707 to the dismal range of 562 to 632, according to a new credit score simulation at, a joint venture between the leading credit scorer Fair Isaac & Co. and credit bureau Equifax.
Tip: The best way to avoid late payments is to put as many of our bills on an automatic payment plan. Mortgage lenders, utilities and phone service providers are happy to take their payments directly from your account each month.
3. Pay down your debts – and consider charging less.
Lenders like to see plenty of breathing room between the amount of debt reported on your credit cards and your total credit limits. The more debt you pay off, the wide that gap and the better your credit score.What many people do not know is that credit scores do not distinguish between those who carry a balance on their cards and those who do not. So charging less can also improve your score – even if you pay off your credit cards each month.Your credit card issuer takes a look at your account once every month or so and reports the outstanding balance on that day to the credit bureaus. This snapshot does not reflect whether you pay off that balance a few days later or whether you carry it from month to month.Transferring credit card debt from one card to another could lower your score. Typically a revolving balance of 35% or less of the AVAILABLE credit is desirable to the credit bureaus. For example, if you have a credit card with a $10,000 available credit limit, make sure to keep your balance at or below $3,500 at all times.
Tip: If you plan to apply for a mortgage, car loan or other major credit account in the next year, start paying down those balances now. And if you are in the habit of charging everything in sight to your cards – to gain more frequent flier miles, say – consider switching more to cash in the months before you apply. Depending on your situation, the loss of a few miles could be more than made up for by a better score, and thus a lower interest rate.
4. Do not close old, paid-off accounts.
We used to tell people to close accounts they were not using. Now here’s the word from Craig Watts of Fair Isaac’s consumer affairs office: “Closing account scan never help your score, and often can hurt it. Shutting down credit accounts lowers the total credit available to you and makes any balances you have loom larger in credit score calculations. If you close your oldest accounts, it can actually shorten the length of your reported credit history and make you seem less credit-worthy.
Tip: Keep all of this in mind the next time a department store clerk offers you a 10% discount for signing up for a new card. Each new account can put a small ding on your credit score, and offer a new opportunity for credit thieves. Since closing accounts can hurt, it is better to apply only for credit you really need
5. Stay out of bankruptcy AND consumer credit counseling if you can.
Bankruptcy is the nuclear bomb of the credit world – worse than delinquencies, loans or collections. Its impact, however, depends on how many black marks you made on your credit before you files.Bankruptcy can knock 200 points, or more, off the score of someone with otherwise good credit. People with multiple delinquencies or collections on their reports will see fewer declines because their scores are low to begin with. Either way, recovering from a bankruptcy can be tough. Once a score is pushed below 620, which bankruptcy inevitably does, credit becomes scarce and far more expensive.High interest lenders love recent bankruptcies, because they know consumers are not allowed to file again for another six years – plenty of time to squeeze out lots of high rate payments. Mainstream lenders, however, generally will reject consumers with a bankruptcy on their record – and bankruptcies are reported for up to 10 years.Consumer Credit Counseling is generally looked at the same as a Bankruptcy, so if you are overloaded with high interest debt and are in danger of falling behind on your payments – or you already have – consider working DIRECT with the creditor to set up a repayment plan. You can generally negotiate a lower interest rate, removal of fees and more all on your own – all it takes is a phone call!
Knowing your credit score, and the potential impact of a bankruptcy, might help you steel your resolve to pay off your bills and improve your credit situation. Or you may decide you cannot make matters much worse, and file anyway. 
Last tip: 
once you now the impact on your score, get good objective advice before filing for bankruptcy. Attorneys may be overly eager for you to file, while consumer credit counselors may be overly eager that you not…
Whether you are thinking of buying a home or simply curious about how to improve your score, it’s important to correct any errors you discover as soon as possible. You don’t want errors in your credit report affecting your eligibility for credit in the future.
If you have any questions about this article or any others please feel free to call me at (480) 290-6959 or email me at

Carlie Goulet Emily Duarte Headshot
Phone: 480-999-2338
Dated: June 7th 2013
Views: 196
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