Improve Your Credit Score

Providing a better financial picture to potential lenders requires improving your credit score and getting your credit report into top shape. Here’s how to boost your credit score and polish up your credit report.

  • Pay down debt: One quick way to improve the appearance of your credit is to decrease your credit-availability-to-credit-used ratio. Simply put, this means paying down the balances on your revolving credit accounts.

  • Open a secured credit card account: A secured credit card is issued by banks and credit unions and looks just like any other credit card, but you, the cardholder, must deposit money into an account at the issuing institution to partially or fully cover the credit limit for the card.

  • Apply for passbook loans: A passbook loan, or personal loan using your savings as collateral, is an excellent way to add positive information to your credit report, thus improving your credit’s appearance.

  • Use retail store cards: Retail cards are relatively easy to get and can boost your credit appeal. These cards generally have lower credit limits, so they have little effect on your available-credit-to-credit-used ratio, which you want as low as possible.

  • Stay loyal to old accounts: Credit mavens lower your score if you close a longstanding account. They like stability. So keep old accounts. The combination of closing an oldie and adding a new account will hurt your score twice.

  • Explain negative items on your credit report: You have the right under the Fair Credit Reporting Act to add a 100-word statement to your credit bureau file. You can use this statement to improve your credit image, by noting an extended illness that kept you from working, for example.

  • Perform periodic credit checkups: Review your report from each of the three major credit bureaus at least once a year. (You’re entitled by law to a free annual credit report.) Dispute inaccurate entries with the credit bureau and request that positive data be added to your file.

  • Maintain good records: A surefire way to make your credit look good is to pay your accounts in full and on time. To accomplish that, track your bill due dates, your checking and savings account balances, and all other financial information.

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