If you are one of the millions of people carrying debt in any form, chances are that debt is weighing down your credit score. The more debt you carry, the more you will see your credit score suffer as your credit report swells with listings. Falling behind on payments, being forced to settle a debt or, at worst, declaring bankruptcy can cause significant damage to your credit report that will linger from seven to 10 years.
Step 1
Obtain copies of your credit reports from the three main credit bureaus (Equifax, Experian and TransUnion) and review all the negative listings on each report. Identify any unpaid debts that are creating negative listings, particularly within the last 12 months.
Step 2
Determine whether any listings are inaccurate or invalid. If you think some are mistakes, contact the creditor listed on the report and ask them to provide proof that the listing is accurate, or to amend or remove the listing as needed. For all accurate listings, contact the creditor and request that they agree to list the account as paid in full once you have paid the debt, and then agree on a payment plan or determine how you will pay the account.
Step 3
Make all your bill payments on time. Each on-time bill payment registers as a positive listing on your credit reports, and it pushes negative listings further back into the past. When you make on-time bill payments on multiple bills for multiple months, it can boost your credit score quickly, particularly given that 35 percent of your credit score is determined by your payment history.
Step 4
Use your credit cards sparingly, and pay off the balance in full each month. You want to use the credit cards to keep them active, but the less debt you carry, the better. It's recommended that you don't spend more than 30 percent of the credit limit on each card.
Step 5
Consolidate credit cards and retain your oldest cards. Long-lasting accounts on your reports are a sign of stability and responsibility in the eyes of your creditors, and it favors your credit score. Some people argue that the more credit cards, the better, since it will lead to having a better ratio of debt to available credit, but you should only do this if you are comfortable managing large amounts of available credit and spending wisely. Avoid applying for more credit cards in the future--the applications for credit have a slightly negative impact on your credit score.
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