How to Improve Your Credit Reports and Score

By Eric Tyson

Many folks are disappointed to find that their credit reports lack their credit score. The reason for this is quite simple: The 2003 law mandating that the three credit agencies provide a free credit report annually to each U.S. citizen who requests a copy did not mandate that they provide the credit score. Thus, if you want to obtain your credit score, it’s generally going to cost you.

One circumstance allows you to get one of your credit scores for free, but unfortunately, you can only do so when you’re turned down for a loan. Current law allows you to obtain a free copy of the credit score a lender used in making a negative decision regarding your desired loan.

Take an interest in improving your credit standing and score rather than throwing money away to buy your credit score or paying for some ongoing monitoring service to which you may not pay attention. Working to boost your credit rating is especially worthwhile if you know that your credit report contains detrimental information or if your score is lower than 740.

Here are the most important actions that you can take to boost your attractiveness to lenders:

  • Check your credit reports for accuracy. Correct any errors, and be especially sure to get accounts removed if they aren’t yours and they show late payments or are in collection. Refer to the earlier section “Obtaining your credit reports and fixing errors” for more information.
  • Pay all your bills on time. To ensure on-time payments, sign up for automatic bill payment, which most companies encourage customers to use. This enables companies to automatically deduct (typically monthly) what you owe from your checking account or to charge that amount to your credit card so you don’t have to remember to pay the bill. (This also prevents you from being charged interest or late fees when you make a payment after the due date.)
  • Be loyal if it doesn’t cost you. The older the age of loan accounts you have open, the better for your credit rating. Closing old accounts and opening a bunch of new ones generally lowers your credit score, so don’t jump at a new credit-card offer unless it’s really going to save you money, such as if you’re carrying credit-card debt at a high interest rate and want to transfer that balance to a lower-rate card (or provide you with rewards/benefits greatly in excess of any costs). Ask your current credit-card provider to match a lower rate you find elsewhere.
  • Limit your total debt and number of debt accounts. The more loans, especially consumer loans (credit cards, auto loans, and so on), that you hold and the higher the balances, the lower your credit score will be. Work to pay down consumer revolving debt, such as on an auto loan and credit cards.