Improve Credit Score

It is not possible to improve your credit score over night. However, there are immediate steps you can take that would quickly put you on the road to improving your credit score.

Steps to improve your credit score

1. Order your credit report from all the major bureaus and check them carefully for errors. Never assume that all the information is accurate. Pay specific attention to checking the balances on installment accounts such as car loans to make sure they are accurate. Also check the inquiries area to make sure there have not been any fraudulent checks on your credit. Report any findings to the credit bureau via a written letter. Elimination of inaccuracies is an important step to improve your credit score.

2. If you have any accounts in collections, then contact the collection agency to arrange for having them paid. Even if you donít have the funds to immediately pay off the bill, you will likely be able to make payment arrangements with the collections agency. Once arrangements have been made, stick to your end. Often contacting the collection agency will stop them from reporting your balance to the credit bureaus, and no collection reference will certainly improve your credit score. Remember however that once reported, the collection agency reference on your credit report will be a significant barrier to improving your score.

3. Bring down your total debt load (TDL). If you have a large loan outstanding against that expensive new car you purchased, it is time to divest. Replace the expensive car with a more economical one. A high TDL, even if payments are made on time, is a sign to creditors that further lending will be risky. Decreasing the TDL will surely result in improving of your credit score.

4.Never let revolving credit balances such as credit cards and lines of credit get above 50% of the available limit. If you do not have enough funds to bring them under 50% then transfer money from your pay check first to the credit cards and then use the increased availability on your card to pay for everyday items. Pay attention to the date on which your credit card statement is generated and try and keep the balance on the card low for that period of time. This balance is usually what is reported to the bureau at the end of the month opposed to the actual balance at the end of the month. Remember that there is a 30% weight factor in the FICO credit score calculation for total debt load.

5. Never apply for credit unless necessary. Every time you apply for credit and a creditor queries your credit report, there is an impact on your score. You can improve credit scores by refraining from applying for new credit unless required.

6. Finally, make it a habit to pay all your bills on time. This may seem obvious but people often forget this under the daily financial pressures we all face. Nothing will strengthen your overall credit worthiness and improve credit score better in the long run than a disciplined debt management plan and habit.

You can improve your credit score, dont feel discouraged

Remember that it is not rocket science. If you credit score is low then you either have inadequate income for your lifestyle or you are disorganized with your bill payments. In essence many of the above tips attempt to correct these two conditions. Understanding the formulas credit bureaus use and having your credit score explained can also be helpful in improving it. There is always help available from a good credit counselor if required.
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