Personal Finance

12 Ways To Improve your credit score NOW

Not knowing your credit score is probably one of the biggest financial mistakes someone can make. This three digit number is used by lenders to help determine your creditworthiness – meaning if your score sucks, you’ll pay higher interest rates and have more trouble getting loans (not good). Bad credit can even cost you jobs, apartments and higher insurance premiums. I checked my credit score and further covered the importance of it all in my handy article: Your Credit Score: Knowledge is money. Improve your credit score NOW with the following tips:

1. Dispute any errors on your report

You can order a free copy of your credit report and score from By law, each of the big credit bureau’s (Experian, Equifax, and TransUnion) must provide you a free copy once a year – so order one from each and check for any errors. Studies show that there errors in 19% of all credit reports on average.

The credit report bureau is responsible for clearing up any mistakes, so you will have to provide in writing the information that is inaccurate and copies of any documentation that supports your claim. For a full description of how to correct errors, check out the FTC website:

2. Pay on time

If you have past due accounts on your credit report, pay them now and then keep your accounts current. This includes your utility payments, cell phone bills – even your rent can appear on your report so pay on time!

3. Ask for a good will adjustment

If you are running late, ask your creditor for a good will adjustment. If approved, the creditor removes one or two late payments from your credit report. Don’t even bother asking if you are habitually late – you’ll need good history with the company for them to consider forgiving your tardiness. To do this, write a letter stating your account number, and point out how long you have had the card. Also mention the fact that you have stayed loyal despite attractive offers from other card companies, and then simply ask for the adjustment so that you can help improve your credit and continue to be a loyal card user.

4. Pay down credit card balances

How much of your available credit you’re using is accountable for 30% of your credit score. Therefore, if your limit is $1000, it is not recommended to use more than 30%, or $30o of it. If this is not reasonable for you, you can call your credit card company and request that they raise your limit. My personal request to Visa was denied, so I opened a second card with Chase. I have heard of instances that they will oblige if you have good credit and payment history (Visa just obviously doesn’t know a good thing when they see it).

3. Don’t close accounts

The length of credit history makes up 15% of your credit score, so closing old accounts will shorten your credit history and hurt your score. Even if you consolidate your credit onto one card for the lower interest rate, if the card has no annual fee, it is best to keep it open. Just be sure to use old cards since credit card companies may stop reporting the account if it remains inactive for too long. Set it up for automatic payments of some smaller bills, or just make small purchases from time to time.

5. Don’t apply for credit before a big purchase

Don’t apply for a new credit card or loan six months to a year before you plan to make a big purchase like a car or house – this can hurt you.

6. Negotiate your shady credit past with “pay to delete”

improve your credit score

Serious negative marks like foreclosures cannot be negotiated, but collectors and lenders can often remove smaller collection accounts if you negotiate a “pay for delete” with them. This involves writing a letter to the creditor and asking to have the crappy account removed or marked as “paid as agreed” in exchange for your payment (or a settled payment amount). Creditmagic has a sample letter  you can use as a template for this request. Only pay the balance once they agree in wrtiitng to delete the account.

7. Apply for different types of credit

This was my problem. I was a renter with only one credit card that never carried a balance, and I have no other loans. I should have amazing credit, right? That’s what I thought. While my credit score was fine, my score was low because I didn’t have a good credit mix. The types of credit you have makes up 10% of your score, and lenders like to see that you can handle loans that are both revolving (credit cards) and installment (mortgage or car loan).

If you only have a credit card, you can add a small personal loan to the mix, like a signature loan from a credit union. When paid on time, blended credit boosts your score.

8. Keep credit inquiries in a small time period

Credit inquires make up 10% of your score, so if you’re looking for new loans or credit cards, do it within a small time period. If you have several credit inquiries within several days, credit bureaus will assume you’re comparison shopping and lump them all into one – and the fewer the better. Note that checking your own credit does not count!

9. Can’t get a credit card? Open a secured card

If you don’t qualify for a credit card, you can open a much easier to get secured card that is backed by cash that you put into a deposit account. By paying on time every month you will boost your score and be given the opportunity to later gratuate to an unswcured card (and get your deposit back).

Check out Money Talk New’s credit cards page for a list of recommended secured credit cards.

10. Stay on top of student loans

Sure they suck, but defaulted student loans hurt your credit score. If you haven’t been paying yours on time, you need to contact the lender to see what your payment options are. Federal student loans are eligible for payment plans that can help you out. For example, the Income-Based Repayment Plan lets you pay off your loan in monthly installments based on your income level.

11. Make sure every company reports

You can actually contact every company you pay monthly (cell phone provider, cable company, electric company) and asked them to report your payments to the credit bureaus. If you pay on time, you may see a small boost in your score.

12. Find out when your balance is reported

This is interesting. Credit card companies have a “balance date,” or the date they report your balance to the credit bureaus. Not surprisingly, that date is rarely the same day as the date your payment is due. Thus you can pay your balance off in full every month, but your credit report could still reflect a balance. Crazy, right? Contact your creditors, ask them when the balance date is, and pay your bill before it.

So find out what your score is and start improving it NOW. It takes time to turn a blemished credit history around – so you likely won’t see improvements for several months. Be patient and soon you will have a credit score as attractive as Ryan Gosling. I would give him a loan anytime… and my loan I mean… I would lend him money.



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  3. Wow the pointer about the report date realllyyy helped. I was unaware of this. I’m personally working on my credit mix no since Ive officially kicked subprime cards to the curb.

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