5 Clever Ways to Raise Your Credit Score

If you do a search on the internet you will find thousands of websites that provide information on how to increase your credit score or repair your credit.  This means that there is something beneficial about having good credit.  Good credit increases your chances of being hired for a job, provides you with cash back rewards, provides good interest rate and terms, notices about sales or discounts and more. 

Your credit is your financial identity - your financial resume and is one of the most important aspects of your life.  It can help you or hurt you during the course of your life.  Credit affects many aspects of your life such applying for a home or apartment, or applying for a personal loan or credit.  Some people have been fired from jobs or have not been considered for employment because of their bad credit.  If you have bad credit it is never too late to fix it and improve your financial situation.  You can restore your credit and still achieve your financial goals.

The first step to repairing credit damage is by ordering a copy of your credit report from the three major credit bureaus, Experian, Equifax, and TransUnion at www.annualcreditreport.com. Review your credit reports carefully checking all information for accuracy such as: name, address, phone number, SSN, date of birth, current and previous addresses, accounts, account numbers, open and closed dates, status of the account, amount owed, and payment history.

Once you have reviewed your credit report determine if you have any past due accounts. If you have bad credit due to the loss of a job, health issues, family issues or a disability let the creditor know right away. Call the creditor to setup a payment plan to pay the debt.  Determine the monthly amount you can afford, but don't let the creditor determine the amount for you.

If you find errors on your credit report write a letter to the credit bureau that is reporting the error or request an investigation by disputing the information online at the credit bureau's website. Provide any supporting documentation to prove your claim. The credit bureau will respond to your letter within 30 days from the day of receipt. Keep copies of all correspondence sent and received in the event you need to reference it in the future. If you do not receive a response follow-up with a letter to the credit bureau to verify the updates were made.

Order another copy of your credit report after 45 to 60 days have passed to verify the updates were made. You can also write a letter to the creditor reporting the error.  If the creditor does not respond with 30 days you can request the credit bureau remove the account from your credit report based on the Fair Credit Reporting Act.

1. Establish Credit. Open a department store credit card. They usually have the highest interest rates but provide easier approval than bank credit cards.  Buy something small and pay the balance in full each month. You can also open a secured credit card account. Ensure the account is reported on your credit report.  Get a secured card with low fees and a low interest rate.
2. Pay down debt.  Keep balances at 20% or less of the credit limit. Having credit cards maxed out or close to the limit decreases your credit score. Pay the smallest bills first then work towards paying the larger bills.
3. Get current.  Pay late accounts which greatly lower your credit score such as bankruptcy, judgments, tax liens, foreclosures, repossessions and collection accounts.  Ask creditors to remove the accounts from your credit report after the account is paid in full to help increase your credit score.
4. Closing accounts.  Don't close accounts that have been open for 2 years or more and don't close accounts that are in good standing.  Closing accounts can decrease your credit score. 
5. Negotiate.  Ask creditors to settle the account for 50% of the total amount owed.  In exchange for payment ask the creditor to remove the account from your credit report and request a confirmation letter stating the account will be removed prior to making a payment. If the creditor refuses ask the creditor to report the account as “paid” or “paid in full”.