Ways to Improve Your Credit Score

Get a FREE copy of your credit report
The First Rule for improving your credit is knowing what is being reported on your Credit Profile. To properly evaluate your profile, you will need a credit report from all 3 nationwide consumer credit reporting bureaus: Experian, Equifax, and TransUnion. Information reported by one bureau may be different than information reported by the other two bureaus. You are entitled to request a free credit report, once every 12 months from each of the 3 credit bureaus, or sooner if you've recently been turned down for credit.

Remove inaccurate information from your report
After receiving your credit report, check it for accuracy. Make sure the personal information is correct, specifically your name, address, social security number. This alone will reveal if there is any information on your report that does not belong and may hurt your score.

Make sure your accounts are paid on time
On your credit report, there is a column called "Past Due". Credit score software penalizes you for keeping accounts past due. Past Dues destroy a credit score. Make sure that you keep making at least the minimum monthly payments on your accounts. Even though it may be just the minimum payment, do not let your account go over 30 days. The more accounts that are paid on time, the better risk you are.

Wipe out late payments or charge-offs
If you are 30 days late, you can call creditors that report late payments on your account and request a one-time courtesy removal of late payments reported on your account. Be persistent. If they refuse to remove the late payments at first, remind them that you have been a good customer that would deeply appreciate their help. If the representative refuses to make a courtesy adjustment on your account, call back and try again with someone else. Persistence and politeness pays off in this scenario.

 Charge-Offs are when the creditor gives up on collecting the balance due. They may or may not sue. Although charge-offs may show as a zero balance due, they will kill your credit score. Collections are when the creditor sends the account to an outside agency to collect severely past due accounts. If you have both charged-off accounts and collection accounts, but limited funds available, pay the past due balances first, then pay collection agencies that agree to remove all references to credit bureaus second. Charge-offs and liens within the past 24 months severely damage your credit score. Creditors work with debt settlement agencies and will often accept less than the full amount due to settle balance owed.

Pay down maxed-out cards
Credit scoring software likes to see you carry credit card balances as close to zero as possible. Creditor scores are severely damaged by "maxed-out" cards, when you are using the entire credit limit. Try and lower the amount owed to half of the credit limit, otherwise that will penalize you. Balances over 70% of your total credit limit on any card damages your score the most. The next level is 50% of your balance, then 30% of your balance.

 In order to maximize your score without having to pay down your balances, evenly distribute your credit card balances among all of your credit cards, rather than carry a large balance on one credit card. For example, if you are carrying a $9000 balance on a credit card with a $10000 limit, and you have two other credit cards with a $3000 and $5000 limit, transfer your balances so that you have a $1500 balance on the $3000 limit card, a $2500 balance on the $5000 limit card and a $5000 balance on the $10000 limit card. Evenly   distributing your balances will maximize your score.

Make sure creditors report your credit limits to bureaus. When no limit is reported, credit scoring software scores the account as though your current balance is "maxed out". For example, if you know that you have a $10,000 limit on your credit card, make sure that the limit appears on the credit report. Otherwise, your score will be damaged as severely as if you were carrying a balance of the entire available credit.

 15% of your credit score is determined by the age of the credit file. Fair Isaac's credit scoring software assumes people who have had credit for a longer time are at less risk of defaulting on payments. Even if your old credit cards have horrible interest rates, closing those cards will decrease the average length of time you've had credit. Use the old card at least once every six months to avoid the account rating to change to "Inactive". Keeping the card active is as simple as pumping gas or purchasing groceries every few months, then paying the balance down. Hold onto those old cards trust me!

 Preparing credit is a slow and time consuming process. Full knowledge of your credit profile and how it represents you to creditors and credit bureaus is pivotal to full credit restoration success. Credit bureaus always advise individuals that they have a right to dispute their own credit files, but when the rights of the Credit Bureaus slow you down , you know where to ask for help.