How to Improve Your Credit Score
There are no quick fixes to improving your credit score. Disputing all of the negative information in your credit report will not improve your score, nor will it result in the negative information being removed. If there is inaccurate information, you should certainly dispute it so that it can be corrected.
It is very easy to ruin a credit score, but it takes a long time to improve a bad credit score.
Here are a few good tips for improving your credit score:
- Pay your bills on time and continue paying your bills on time. The number of accounts that are current and the length of time for which they are paid on time has a big impact on your credit score.
- Paying off an account with negative information does not remove that information from your credit history. Only time can reduce the impact of the negative information, as older credit history doesn't count as much as more recent information. It is better to keep the account active, but to make regular payments as per the credit agreement. This provides positive information to help compensate for the negative information.
- Do not close accounts that are current, even if you are no longer using them. The length of your credit history in an account has a positive impact, as does the number of accounts that show no late payments. It is more important to have accounts with positive history than to have no history because you have no accounts.
- Minimize your use of revolving credit, such as credit cards and department store cards. Keep the balances low, and preferably pay off the balance in full at the end of the month. Installment loans (auto loans and mortgages) are a better form of debt.
- Pay down installment loans, as the ratio of the current balance to the original balance is a measure of your ability to repay debt.
- Don't max out your credit cards. If you use too much of your available credit, it can be a sign that you're overextended.
- Avoid opening new accounts that you do not need. Opening too many accounts and the time since you last opened an account can affect your credit score.
- Do not file for bankruptcy. A bankruptcy will affect your credit for 7 to 10 years.
- When looking for a new installment loan, confine your inquiries to a short period of time. Generally, inquiries for a single type of financing within a 14 day period are considered to be a single event. [This shopping-around rule does not apply to private student loans. Each loan application is treated as a separate inquiry and can hurt your credit score.]
Requesting a copy of your credit report will not affect your credit score, nor will unsolicited inquiries from other companies. The credit score focuses on consumer-initiated inquiries that involve seeking and obtaining new credit.