How to Raise My Credit Score After Paying My Debt

Eliminating your debt is no easy task. Yet once it's gone, it can still be hard to build a solid credit score for those large purchases down the road. Contrary to popular belief, the best way to build your credit score is not to eliminate your debt but rather to control it. The best way to make the credit companies view you as an asset is to show that you are a responsible, reliable consumer of credit.

Instructions

1

Confirm that your debts have really been eliminated by requesting a copy of your credit report. You are entitled to a free copy of your credit report once a year, and this report can easily be found online. Visit a free credit report site recommended by the U.S. government or state governments to access your credit report, like annualcreditreport.com.

2

Familiarize yourself with your accounts, their balances, and the pros and cons of each account. Eliminate unnecessary accounts that carry an annual fee or have other significant drawbacks. Retain accounts with high credit limits to increase your debt/credit limit ratio, one of the factors used in determining your credit score.

3

Acquire a student loan, car loan or other small, manageable loan that can be paid in full every month. A credit card balance will work for this, if the account is paid in full each month. To increase your credit score, pay more then the minimum payment each month, regardless of the type of loan.

4

Open new credit card accounts to increase your total credit limit. Do this with caution, as you do not want to have too many credit card accounts at one time, or this can be viewed as a negative by the credit assessors.

5

Manage your savings by opening long-term, tax-free savings accounts. 401(k)s are usually the best option, if offered by your employer, but IRAs can be an excellent tool for those who cannot use a 401(k). By saving money in the long term, you can help your overall credit appearance and insulate yourself against future credit-related issues. By depositing your money without paying taxes on it, you receive the benefit of the interest that money can earn and merely pay taxes on the dividends down the road.