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7 Ways To Boost Your Credit Score


1. Check your credit report for accuracy.
You can get a free credit report at FreeCreditReport.com. You are entitled to one free copy per year. Errors are maddeningly common: Over 25% of reports contain errors that are serious enough to result in the denial of credit, according to a July 2004 report by the U.S. Public Interest Research Group. Be sure to report any inaccuracies to all three credit-reporting agencies: TransUnion, Equifax, and Experian. Here is a letter you can use.

2. Pay your bills on time
Missed payments are the single biggest killer of credit scores. Your past behavior - late or missed payments, foreclosures, bankruptcies etc. count for approximately one-third of your credit score.

3. Pay down balances
One-third of your credit score is based on the amount you currently owe in relation to your credit limit. Try to keep your balances at 50% or less of your credit limit.

4. Keep old lines of credit open
15% of your score comes from how long you've been managing credit. Closing old accounts shortens your credit history and lowers your score. Lenders also take into account the average age of your accounts, so an older account can help balance newer credit.

5. Limit new credit
Take on new credit only when you need it. New credit can hurt your score twice. For starters, new inquiries for credit count for 10% of your score - and a flurry of new credit requests can lower your score. Also, once a new credit line is secured, the average age of your accounts will shorten, which in turn can drag down your score even more.

6. Communicate with your creditors if you have difficulties
Many creditors are willing to be understanding of difficult financial situations and short-term financial problems, especially if you openly communicate with them in a timely manner. Forcing a creditor to turn your debt over to a collection agency will simply cause you bigger problems because collection agencies are relentless when it comes to recovering money. The negative information that's placed on your credit report will have a long-term negative impact on your credit score. Your creditors may be willing to do one or more of the following things to assist you:

 

7. Goodwill adjustments
A single late, or overlooked payment can affect your credit score for years. A goodwill adjustment is a gesture from a creditor to re-age an account and report certain late payments as having been made on time. It is entirely up to the creditor - so you need to ask nicely :)) Call and ask, and regardless of the reply, mail a letter. Here is a sample letter you can use. 

 

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