Your credit score is a three-digit number calculated based on the information on your credit report. They can range from a low of 300 to a high of 850, although most customers with "good" credit will have scores over 700. Fixing your credit score is a matter of fixing the derogatory items on your credit and starts with ordering a copy of your credit report so that you know what is on your report and what action you need to take.
Review Your Credit Report
Look carefully through your credit report. Identify accounts you never opened or accounts you should have closed. After you have done this, note any accounts that are showing derogatory information. Derogatory information is anything from a late payment to a collection or judgment.
Have the Credit Agency Correct Errors on Your Report
If you found errors on your credit report, contact the agency that issued the report to request that they correct the error. In most cases, it is their responsibility to confirm the account with the creditor and, if they cannot, they will have to remove the item from your report. The law requires that you contact your credit bureau in writing, and it is in your interest to use certified mail to prove not only that you contacted them but when you contacted them.
Deal With Derogatory Items
If legitimate derogatory items are harming your credit score, you will need to handle them. If they are relatively new, your best bet is to pay them. Contact the creditor and see if you can negotiate a "pay for delete" arrangement where they completely delete the negative item in exchange for payment. Ensure that you confirm this in writing, though. If the item is especially old, you may choose to leave it alone, since most derogatory items will drop off your credit report seven years after their most recent activity.
Pay Your Bills On Time
Moving forward, simply playing your bills on time will make a great difference in your credit score. Although it can take time for derogatory items to drop off, the more positive history you can amass, the higher your score can go.
Use as Little Credit as Possible
One of the things that your FICO credit score tracks is how much of your existing credit you are using. The assumption is that if you are "maxed out," you are likely living beyond your means and a risk of default. With this in mind, try to use as little of your available credit as possible. Spending at or below 30 percent will also help to improve your score. In other words, if you have $10,000 worth of credit lines, try not to use more than $3,000 of them.
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