If you want your credit score to be high enough to get a credit card, an auto loan or a mortgage, or even to rent an apartment, get a job, take out insurance or get utilities or a cell phone, and you have a poor rating, there are ways to improve your credit score. It takes time to improve your score; however, some measures you take will show up faster than others will.
Improve Credit Score
Get copies of your credit reports from all three of the credit reporting agencies: Equifax, Experian and TransUnion. According to Bankrate.com, 70 percent of credit reports contain errors. You may have an error or errors on your credit report that is making your score appear lower than it actually is. By sending a letter certified mail to all three credit reporting agencies that documents what the error or errors are, you can quickly raise your score, if you are correct.
Start paying your bills on time. Payment history is a huge factor in your credit score. If you are chronically late, had a bill go to collections or declared bankruptcy, your score will be lowered.
Leave plenty of available credit on your credit cards. You can have several different credit cards, but if they are all maxed out or close to it, your score will go down. Pay down outstanding balances, and do not use your card again until you do. The best strategy, if you are maxed out on several cards, is to pay off the card with the highest interest rate first by making more than the minimum payment, while making your minimum payments on the other cards. Once you paid off one card, start the process with the next card. Owing the same amount on one card is better for your credit score than owing the same amount on several different cards.
Stop applying for credit. If you recently applied for too many new accounts, this will have a negative impact on your credit rating.
Easy Fixes Explained
Easy fixes for your credit can backfire, according to MyFICO.com. For example, some people think that by opening accounts just to have available credit, that this will help their score. However, the opposite is probably true, and you will have lowered your score even more. Rapid account buildup looks bad to people granting credit.
Another scheme people try is to increase their credit limits so that it won't look as if they are maxed out anymore. However, when you call the credit card company to get the increase, it will negatively affect your credit card rating as if you applied for new credit.
Another method that you could try, which the FTC or MyFICO.com do not recommend, is to take out an installment loan. Pay off your credit card with that, and then pay off the installment loan. The installment loan may not count against you as much as the credit card balance will.
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