How to Raise Your Credit Score
by Ellise Walsh

The value of diligently tracking your credit score is often underestimated. Failure to know what is on your credit rating can keep you from qualifying for loans and in far too many cases will cause you to pay higher interest rates.

The trick to raising your credit score is no secret, but it does take diligence and hard work.

First, check to see what is on your credit report. You can usually obtain a copy of your credit report for free on a trial basis from a number of agencies. Take caution, however, not to overuse these offers. Requesting too many credit reports can actually have the opposite effect on your credit score. When lenders see a large number of credit report inquiries they assume it is due to applying for loans and credit cards. This translates to money problems and lowers your credit score. At the most, you should only request your credit report one to two times per year. That should be sufficient for you to stay on top of your credit score.

Make sure you obtain a three-in-one report. There are several credit reporting bureaus and each one calculates your credit score in a slightly different manner. It is in your best interest to find out what is being reported by each agency.

If you do have a bad credit score, some of the items that contributed to your rating will take time to clean up, but the good news is that some can be cleaned up in just a matter of days.

Save yourself some money and time and steer away from offers from companies who claim they can fix your credit score for you. In most cases, these companies charge a small fortune and do very little. There is really no secret to fixing your credit. You can do it yourself and save yourself their expensive fees.

When you receive your credit report, be sure to review it carefully. While most of the
information your report will probably be accurate, there may be some information that is completely in error. For example, you may notice that while you distinctly remember paying off a bill in the past, it is now showing up as delinquent on your credit report. In worst case scenarios, you may realize you have been the victim of identity theft and someone else is having a good time at the expense of your credit rating.

If you do see something on your credit report that looks suspicious or that you know is completely in error, write a letter. Keep it brief, but state in clear terms what the situation actually is. If you paid off that bill, include copies of backup documentation;
such as cancelled checks or receipts. Mail the letter certified with a return receipt requested.

Be aware of what factors contribute to your credit score. Payment history, account balances, age of established credit, recent inquiries and opened accounts, credit mix are the five major factors that makeup your credit score.

Don’t succumb to offers for a certain percentage off a purchase if you open a charge
account. That 10 or 15% you might save on your purchase isn’t worth the negative impact on your credit score.

If you have a lot of credit cards, don’t feel you need to get the scissors and start cutting. Credit cards can work to your advantage if used properly and responsibly. For the most part, credit score formulas look at the balances on your credit cards; if you’ve maxed them out, etc. Closing out accounts won’t necessarily improve your credit score. If you know you have a problem with charging everything simply because it’s convenient, lock away all your credit cards except for an emergency card. Then begin a diligent effort to begin paying down the balances on your credit cards. Experts recommend that at any given time you should always have at least 25% of your remaining credit limit available and unused.

Additionally, don’t think that consolidating your credit card balances on one card will
help your credit score. Extensive moving around of money is a red flag to lenders and will usually hurt you more than help you.

If you do have an account that has a zero balance, don’t think it will raise your credit
score to close out the account. That zero balance account is actually helping your credit score.

Make sure you pay your bills on time, every time. Set up some kind of reminder system if it helps or even set up your bills to be deducted straight from your account.

It may take awhile to raise a low credit score, but the effort is well worth the reward.

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