Pay your bills on time.
Delinquent payments and collections can have a major negative
impact on your score.
If you have missed payments, get
current and stay current. The longer you pay your bills on
time, the better your score.
Be aware that paying off a collection
account will not remove it from your credit report. It will
stay on your report for seven years.
If you are having trouble making ends
meet, contact your creditors or see a legitimate credit consultant.
This won’t improve your score immediately, but if you can begin
to manage your credit and pay on time, your score will get better over
time.
Keep balances low on credit cards and other “revolving credit." High outstanding debt can affect a score.
Pay off debt
rather than moving it around. The most effective way to
improve your score in this area is by paying down your revolving credit. In
fact, owing the same amount but having fewer open accounts may lower your
score.
Don’t close unused credit cards as a short-term strategy to raise your score. Don’t open a number of new credit cards that you don’t need, just to increase your available credit. These approaches approach could backfire and actually lower your score.
Length of Credit History
Tips
If you have been managing credit for
a short time, don’t open a lot of new accounts too rapidly.
New accounts will lower your average account age, which will
have a larger effect on your score if you don’t have a lot of other credit
information. Also, rapid account buildup can look risky if you are a new credit
user.
New Credit
Tips
Do your rate shopping for a given loan
within a focused period of time.
FICO® scores distinguish between a
search for a single loan and a search for many new credit lines, in part by the
length of time over which inquiries occur.
Re-establish your credit history if you
have had problems. Opening new accounts responsibly and paying
them off on time will raise your score in the long
term.
Note that it is OK to request and check your own credit report. This won’t affect your score, as long as you order your credit report directly from the credit reporting agency or through an organization authorized to provide credit reports to consumers. Try www.annualcreditreport.com.
Types of Credit
Use Tips
Apply for and open new credit accounts only as needed. Don’t open accounts just to have a better credit mix – it probably won’t raise your score.
Have credit cards – but manage them responsibly. In general, having credit cards and installment loans (and paying timely payments) will raise your score. Someone with no credit cards, for example, tends to be higher risk than someone who has managed credit cards responsibly.
Note that closing an account doesn’t make it go away. A closed account will still show up on your credit report, and may be considered by the score.