Your credit score is one of the most important numbers you'll ever have to deal with, particularly when it comes to your own personal finances. Your credit score is formulated based on the entries listed on your credit report, and if you have negative listings, your score could drop fast. Low credit scores lead to higher interest rates on loans and in many cases might prevent you from getting a loan. If you want to raise your credit score, you'll have to take a look at your credit report and see what you can fix.
Step 1
Obtain copies of your credit report from all three credit bureaus (Equifax, TransUnion and Experian) and go over all the negative listings on each report. Look for listings that may be inaccurate or outright wrong. Write a letter to the possessor of the alleged debt and request the debtor to either provide proof of the debt's validity or remove the listing.
Step 2
Pay all your bills on time. Any credit counselor will tell you this is the quickest and easiest way to start fixing your credit report. Paid bills will create positive entries each month. If you have five different bills to pay each month, that adds up to five positive entries every month, which will get your score headed in the right direction fast.
Step 3
Pay off your credit card debt. This is more important than paying off your debts from home, student or other personal loans. Credit card debt is calculated as the percentage of your credit limit you've consumed with debt. Anything over 30 percent can negatively affect your report, and consistent balances will also show up on your report.
Step 4
Use your credit cards sparingly and get rid of unnecessary cards. Keep your oldest cards and get rid of the newer ones--it looks better to have older accounts open. Paying off your credit cards in full every month will register a zero balance. You can outsmart the credit card companies by paying off your bill a week early. Some companies use the debt you carry days before the payment due date to apply to your credit score, according to Forbes, hurting your credit and letting them charge higher rates even though you pay your bills on time.
Step 5
Minimize your requests for new credit, such as loans or credit cards. These requests are listed on your credit report and can lower your credit score, since they show a need or desire to take on more debt.
Member Comments