How to Increase Credit Scores On Your Own

Each year, many people embark upon the journey to improve their credit scores. Whether they have a relatively high score and just want to get their score even higher, or if they have suffered some setbacks and intend to clean up their credit rating, many individuals are interested in learning how to improve their credit scores.

improvingcreditscorechart
Your Credit Score Factors

Improving Your Credit Score Takes Time

Improving your credit score is a lot like losing weight. Just like losing weight and keeping it off over time requires that you develop a few new skills and a lifestyle of healthy eating, improving your credit score requires that you develop and maintain a few good financial habits. Over time, your credit score will improve, as will the state of your finances.

1.) Obtain Your Credit Report from All Three Credit Bureaus

The first step to improving your credit score is to know where you stand with each credit reporting agency. Because lenders may report your credit data to one, two or all of the credit bureaus, it is important to get your score and credit report from all three companies; TransUnion, Equifax and Experian. Your three credit scores may be similar or you may find huge discrepancies between them. One credit bureau may have mistakes recorded on your credit report. A positive payment history may have not been reported to one of the companies. There are several reasons why the score from each of the three credit bureaus may differ.

2.) Carefully Examine Each Credit Report

The next step in the process is to closely examine each report for errors or mistakes. If you do not recognize an account in the Trade Lines section of one of your credit reports, immediately dispute the entry. Each of the three credit bureaus allow consumers to dispute errors on their credit reports using an online form. You can also dispute an entry using the downloadable form available on each of the three companies’ websites. However, the online form is much faster for starting the dispute process.

Once you have filed a dispute, the company that provided the data has 30 days to respond. If they cannot validate the entry within 30 days, the entry is removed from your report. Challenge any entry that you believe is not valid. The burden of proof lies with the company that provided the reported data.

3.) Resolve Any Outstanding Collections and Delinquent Accounts

Check the Judgments and Collections section of each of your three credit reports for any accounts that have may been passed on to a collection agency. You may be able to resolve any accounts that have gone to collections for just a fraction of the original balance of the account. If you have any accounts that are reporting delinquencies, contact the company and arrange payment to get the account current. Even though delinquent payments will still appear on your reports, as the account becomes current, this information will also be recorded.

4.) Pay Bills On Time and In Full

One of the most important things you can do to improve your credit score is to pay your bills on time and in full. Potential creditors are keenly interested in your payment history and habits. Pay your bills on time and in full, and you will do wonders for your credit score.

5.) Pay Off Credit Card and Revolving Credit Balances

If you have credit cards, you should pay more than the minimum balance with each payment to reduce the balance. Stop using your credit cards and make paying off your revolving accounts a top priority. Various financial experts recommend different strategies to implement for paying off your credit cards and other revolving accounts. Some recommend that you start with the account with the lowest balance and work to pay off the balance. Others recommend that you start with the account with the highest interest rate. The important factor is to set a goal to pay off your accounts, and to set forth a strategy to do so.

6.) Do Not Apply for Additional Loans or Credit Cards

Refrain from applying for additional credit while you work to improve your credit score. First, your goal is to reduce your limit of debt and increase your available credit. However, credit inquiries, such as those that are performed when you apply for a loan or credit card, have a negative impact against your credit score.

Putting these actions into practice will help you improve your credit score. Again, credit score improvement takes time. Develop good habits with regards to paying bills on time and maintaining credit accounts without charging up high balances or maxing them out.