- The first step in raising your credit score is to get a copy of your credit report. You can do this for free from annualcreditreport.com. The government has mandated that all individuals are entitled to a free report annually. This site will help you get reports from all three major credit reporting agencies: Equifax, Experian and TransUnion.
- Review this report for any discrepancies. It will span the life of your credit history. Do not fall into the trap of believing anything older than a certain number of years will not effect you. Contact the reporting agency immediately if something is incorrect on your report.
- Pay down your credit card debt. Credit scores have credit thresholds at 30, 60, and 90 percent of available credit on credit cards. Monitor your cards and the available credit amount. Work diligently to hit each of these thresholds as you pay down your debt. If your available credit is more than listed on the report contact the credit reporting agency immediately to correct this oversight.
- Understand what is important in credit reporting. Many times people feel that cancelling a card will hurt their score. This is true however it should not be viewed as a blanket statement. First you must do what is right for you. If you can not control your impulses and will use he card, cancel it. Also understand that you should not cancel that old card in the purse in the back of your closet. It has the most history and using it may increase your score more than that the new card that has a .5% better interest rate.
- Pay your bills on time. Credit reports reflect monthly payments you have made on open accounts. A 30 day past due will be notated just as a 90 days past due will. Obviously they effect you differently but be aware every negative period is notated. Do whatever you need to do to make your payments. If you feel you are losing control contact your creditor. They do not want you to get behind anymore than you do. They will work with you ensure they receive some type of payment if you are willing to work with them and be honest. You must realize that ignoring problem will not make them go away, this is your reality and you must move forward.
- While credit scores have idiosyncrasies that do not make sense, understand it is simply a tool to help creditors make a judgement of how likely you are to make your payments. When you make your car payment on time it shows everyone you care about taking care of your responsibilities.