Wednesday, April 8, 2009

Improving Your Credit Score

These suggestions work best if you have poor or mediocre scores to begin with (under 700).

1) Not everything that's reported in your files matters to your scores but here is the stuff that's usually worth the effort of correcting with the bureaus:
a. Late payments, charge-offs, collections or other negative items that aren't yours.

b. Credit limits reported as lower than they actually are.

c. Accounts listed as "settled," "paid derogatory," "paid charge-off" or anything other than "current" or "paid as agreed" if you paid on time and in full.

d. Accounts that are still listed as unpaid that were included in a bankruptcy.

e. Negative items older than seven years (10 in the case of bankruptcy) that should have automatically fallen off your reports.

2) Pay down your credit cards. Keep you balances below 30% of your total limit.

3) Use your cards lightly. Again – don’t rack up more than 30% each month – even if you pay it off.

4) Pay off your credit card bills and then wait a full billing cycle before charging any more purchases on the card. FICO likes to see that you're still using credit, but doing so responsibly.

5) Your scores might be artificially depressed if your lender is showing a lower credit limit than you've actually got

6) The older your credit history, the better but if you stop using your oldest cards, the issuers may stop updating those accounts at the credit bureaus. The accounts will still appear, but they won't be given as much weight in the credit-scoring formula as your active accounts.

7) If you've been a good customer, a lender might agree to simply erase that one late payment from your credit history. (You usually have to make the request in writing.) Also, ask that your accounts be "re-aged" if your recent credit history is good but you had rough times in the distant past.

8) Dispute old negative credit records. The older and smaller the amount, the less likely the collection will bother to verify it.

9) Closing an account can't help your scores, and may hurt them. If your goal is boosting your scores, leave these alone.

10) If you are having trouble making ends meet, contact your creditors or see a legitimate credit counselor. This won't improve your credit score immediately, but if you can begin to manage your credit and pay on time, your score will get better over time.


1) Ask any creditor to lower your credit limits.

2) Make a late payment under any circumstances.

3) Consolidate your accounts because it's better to have smaller balances on a few cards than a big balance on one especially if it means closing accounts with poor history.

4) Apply for new credit if you have enough.

5) Open multiple lines of credit quickly in effort to establish credit history.

6) Consolidate credit cards
7) File Bankruptcy

8) Foreclosure/Default
9) Allow excessive credit checks

How your score is broken down:

• Payment history: 35 percent

• How much you owe: 30 percent
• Length of credit history: 15 percent

• New credit: 10 percent

• Types of credit: 10 percent

From Fair Isaac’s Website:
“As the provider of the FICO® score, the industry-standard measure of consumer credit risk, we believe every consumer should know how to practice good credit management. As part of our commitment to consumer empowerment, we provide free information on how FICO® scores work at We partner with banks and such organizations as the Federal Citizens Info Center and the Consumer Federation of America to help people understand how credit scoring works. And we have created programs that our banking clients can use to provide FICO® scores free to their customers on their monthly statements.”

“I never worry about action, but only about inaction”
- Winston Churchill


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