What's great is the fact that there are many simple things you can do to improve your credit score today. Like anything in life, be proactive and monitor your FICO credit score. Here are a few simple steps to increase your credit score.
1. Get your FICO Credit Score: This one is fairly obvious. You need to find out what your score is in the first place so you have a baseline and a way to measure improvements. There are a few sites that have free credit reporting such as Creditkarma.
2. Get a free copy of your credit report: Go to AnnualCreditReport.com to get a free copy of your credit report. It is federal law that the 3 major credit reporting agencies must provide each individual with a free credit report every year.
3. Review your Credit Report: This is a really important step and where you can really improve your credit score by finding mistakes and even identity theft issues. Make sure all the information is accurate and was authorized by you. More often than not, creditors will often omit or delay the reporting of the completion of loan payments. This alone is worth a large number of credit score points.
4. Review loan inquiries: When consumers are in the market for some credit they tend to shop around and inquire to many different institutions. The general rule is: "official" inquiries lower your credit score by a few points per inquiry which can add up if you do a lot of inquiries. Make sure you have authorized each inquiry that you find on your credit score. It is easy to find your credit score without having to do an "official" inquiry.
5. Fix any errors you find: Once you have reviewed your credit report, you would then fix or dispute any errors you find. You can either go directly to the creditor to discuss the error or go directly to the credit reporting agency or both. It is law that they are required to investigate any errors you bring to their attention and respond to you within 30 days.
6. Pay down your debt on time: Late payments are usually reported 30 days past due, but a lot of times being one day late can incur penalties so pay your bills on time. Also, paying down your overall debt is very valuable in increasing your credit score so do whatever is possible to pay it down and avoid any new revolving debt. This can lead to better interest rates and easier access to credit in the future.
7. Avoid maxing out a credit card or line of credit: Maxing out an account can reflect poorly on your overall score as it may reflect some financial difficulties that make you a risk for default. This is still true even if you pay off your account in full every month.
Improving your credit score can save you hundreds if not thousands of dollars and will have a positive impact on your finances and your livelihood. Following the steps above will quickly improve your credit score in a relatively short period of time. However, if you are recovering from a major financial issue, it will definitely take time and you will need patience and a great financial plan.
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