11 Simple Ways to Improve Your Credit Score Today

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Improving your FICO credit score has never been more important than it is today. Your credit score affects whether you are approved for a loan, the interest rate your pay, and even the cost of insurance. Credit card companies now use credit scores and credit history (called risk-based pricing) to determine not only the interest rate that will apply to the account, but other terms such as the length of no interest balance transfers. And your credit score can even impact whether you get a job.

In short, your credit score has a big impact on your finances. The good news is that you can begin to improve your credit score today with a few simple steps. I’ve been monitoring my FICO credit score, and my score has gone up about 15 points in the last month. So It thought it was a good time to review the simple steps we all can take to increase our credit score.

1. Get your FICO Credit Score: The first step is to know your credit score. The saying goes that you “can’t improve what you can’t measure,” and that’s never more true than with your finances. The good news is that you can get your FICO credit score for free. You do have to sign up for a 30-day trial, but you can easily cancel the service before the trial ends if you want. I continued my subscription specifically to monitor my score and have been happy with the service thus far.

2. Get a free copy of your credit report: Step two is to get a free copy of your credit report. By federal law, the three major credit reporting agencies must provide each consumer with a free copy of their credit report every year. This is the starting point for improving your score. And remember, you can get your free copy at AnnualCreditReport.com.

3. Review your credit report for transactions that aren’t yours (yes, identity theft!): The first thing to do when reviewing your credit report is to make sure the identifying information about you is accurate and that your open accounts actually belong to you. It may be that your score has been knocked down because somebody is using your identity to apply for credit.

4. Review your credit report for errors: Even if all of the reported accounts belong to you, they may contain errors. For example, a creditor may have reported a delinquent payment (late payments or charge-offs) that was in fact paid on time or repaid. If you paid a creditor in full after some time of missed payments, it’s not unusual for the creditor to have failed to report your payment to the credit bureaus.

5. Review your inquiries for errors: When you apply for most credit, the creditor will pull your credit report as part of its decision whether to extend credit and on what terms. These inquiries are one factor in determining your credit score. The theory goes that if you have a lot of recent inquires to your credit report, you may be applying for credit to address a financial crisis. As a result, inquiries will lower your credit score. What you want to make sure is that you authorized each of the inquiries that you find in your credit report.

6. Dispute any errors you find: Having carefully reviewed your credit report, the next step is to dispute any errors you find. Having successfully disputed errors in the past, I suggest taking two approaches. First, contact the creditor directly to dispute the error. Particularly if you still have an ongoing relationship with the creditor, they generally are willing to look into the issue. Second, dispute the error directly with the credit reporting agency. By law they are required to investigate any errors you bring to their attention and respond to you within 30 days.

Filing a dispute with a credit bureau is much easier than it may seem, and each of the three major credit reporting agencies has a section of their website (Experian | TransUnion | Equifax) that will help you dispute an error online.

7. Pay your bills on time: Having examined your credit report closely and disputed any errors, it’s now time to turn our attention to money management. And the first rule of credit score health is to pay your bills on time. Even one late payment can significantly lower your credit score, and that’s even more true the higher your score is to begin with. Note that most creditors will not report a late payment until it’s 30 days past due. Still, being even one day late can result in penalty fees, increased interest rates, and even closed accounts.

8. Pay down your debt: This may fall into the “easier said than done” category, but it will help improve your credit score. Overall debt and the amount of available credit are important factors in calculating a FICO credit score. So paying down debt over time will help. As a starting point, avoid incurring any new revolving debt while you continue to make payments on the debt you have.

9. Do NOT close revolving accounts: It may seem counter intuitive, but closing credit card accounts, lines of credit, and other revolving debt can actually lower your credit score. This goes with #8 above. One of the factors affecting your credit score is the amount of debt you have as compared to the amount of available credit. The more available credit you have, all other things being equal, the higher your credit score. You can always cut up or put away credit cards to avoid using them, but don’t close the accounts.

10. Don’t max out a credit card or line of credit: Another factor in the credit score formula is whether you use most or all of the available credit on any given account. The theory is that if you max out an account, it may reflect some financial difficulties that could increase your risk of default. And this is true even if you pay off the account in full every month.

11. Apply for new credit only if you must: As noted earlier, inquiries to your credit report will lower your score. Every time you apply for a credit card, line of credit, or other loan, an inquiry is made to your credit report. So to avoid these inquiries, apply for new credit only if you must.

Improving your credit score can have many positive effects on your finances. The simple steps described above will help you to improve your score, and you may seem results very quickly. Of course, if you are recovering from a financial meltdown, it will take time. But with patience and sound financial management, you should see your score start to improve.

Published or Updated: July 17, 2012
About Rob Berger

Rob founded the Dough Roller in 2007. A litigation attorney in the securities industry, he lives in Northern Virginia with his wife, their two teenagers, and the family mascot, a shih tzu named Sophie.

Comments

  1. jackcobain says:

    great bro. Your blog inspires me, you wrote good topics and many readers were glad reading the content of your blog. I think u knowlegeble about credit card score. it’s good bro.see this blow post link its also related to credit card score which help u to add some more healthy data to your blog.thanks.
    Banker Says – Carry Debt to Improve Credit Score

  2. Ellen says:

    Great article. Another thing to add: Call your credit card company if there is an unjustified late fee! I know that CC companies are more flexible on late payments if you have never had one before, so don’t be afraid to talk to them about extenuating circumstances that may have caused you to be late on a payment. This goes with #7 – because just one late payment makes a difference.

  3. I review my credit report every 6 months. Never found any errors other than an out of date address or employer. But still, others have found much more erroneous information that needs correction right away.

  4. kenneth hamilton says:

    I find it difficult to believe that we are still allowing such an antiquated and highly error ridden system (as high as 80% some say) to affect our financial and therefore our overall lives. Seriously, think about a system created or at least used by banks to determine your credit worthiness, when a higher score could and usually does mean as much as billions in absolutely free profits. It just doesn’t fit the criteria used by the justice system to find you guilty of a charge. This system can be used to charge citizens with serious financial charges without but perhaps the minimum possibility of any type of interaction if it is wrong, which it frequently is. Your only recourse is to dispute these wrongful charges but again the final judgement is being made from organizations that, in my experience, usually favor as the banks do the creditor. This happens far more frequently than most realize. An example is how the banks have tightened their standards to hasten the generation of funds, in my opinion and I believe obvious, since a significant number of them participated in a massive scam that caused you and I to have to bail many of them out. Imagine the very same people that they have made a fortune off of over the years by being their judge and jury using this obviously one sided scale being bailed out from what essentially was “bankruptcy or insolvency”. You would think that this would show that they are incapable of monitoring our credit worthiness.

  5. Eloisie Ferguson says:

    Some of my credit card companies are charging annual fee that ranges from $65.00 and up. I am just trying to pay off my credit card and not charging anything. I don’t want to pay the annual fee. Do I need to close the account and just continue paying the balance?Will it hurt my credit if I close it?

    • BC says:

      It won’t solve your problem to close the account at this time. Just don’t use the card. Our score is based on the amount of credit available versus what we owe. Your available credit will go down, so will your score.
      One thing that I learned is that you should keep your balances to only 1/3 of what your credit limit is to each card or account. Don’t use the card alot (heavy use), and do pay more than the amount due, even if $1.00 (try for much more than that).
      Credit Card Companies are not your friend. Try hard not to use them.
      As mentioned earlier, it has a really unfair and strange way of calculating the score. Really work hard to pay them off.
      One last note: In my business class last year I went home very ill one day when I learned a little bit more about credit card companies. We watched a video about a woman who held conferences to help different company employees to see whom they should seek out-or target-to offer cards to, and she thought the middle income was one of the best choices. One gentleman, if you could call him that, was quite the whole day, until the end. He then raised his hand and said that he felt that was the wrong advise. He targets the lower income because that is where the money is. He is talking about the fees that they can charge. Creating fees…for the lower income, who can least afford it! I was boiling mad. I am not lower income, but I could be easily. And I grew up that way. MAD! So look around. That is where many companies are making money-fees!

      • Laura says:

        GREAT POINT BC!!!! Companies make more money out of low income people than out of higher ones. These low income have to pay way more for anything they need. Furthermore, the less they know and they earn, the more they pay for anything. sometimes any little mistake on their credit report cause people big headache. It is really sad, but so true!!!

  6. Paula says:

    I have a guestion reguarding a home equitity loan….is there anyone that could help me with this?
    thanks so much
    Paula Dalton

  7. Matt says:

    What is the best way to repair a poor credit? Any good companies that are helpful and not full of it?

    • Kerr says:

      Matt, I actually was on the search for such a “company”, however, all of the ones I came across were just out to make a quick buck from their clients. The BEST way I found, is to just put in the work yourself. To begin, following the steps above, believe it or not is one of the best ways to repair a poor credit score. It’s going to take work and dedication, but after 3month, six, or even a year or two, it will be well worth it. In addition, its also a thrill to see your score rise steadily. I hope this helps, but if you or anybody out there know of a helpful company, please, feel free to share…

    • Lisa Parks says:

      Matt, (and others)
      I have tapped into my skills as an administrative assistant while I’m home and unemployed with a newborn baby. I’ve “done the work” myself to write letters, make calls, and otherwise help myself and others negotiate with creditors because I agree that the “companies” who advertise to help you are full of it! If you’re interested, please send me an email reply [put LParks CONSULTING in the subject line] and I’d be happy to help you for a minimal (and I mean MINIMAL charge only after we make some progress in helping you). Good luck to all in lowering our credit scores! pasofengshui@yahoo.com

  8. David says:

    I have excellent credit and try to keep it that way, but, I have found that credit card companies have raised my finance rates due to the recent economic mess this country has gotten itself in. I mean I have had 7.80% rates raised to 17.99%. What did I do wrong??? I’ve paid off most of my credit cards and not carrying balances anymore. I have had two banks cancel my credit cards because there was not enough activity with them and wanted to start charging annual fees for using their card. huh! All I was doing was making monthly payments to pay the outstanding balances on them. So, there was activity going on – paying them off. They want you to keep charging on their cards constantly.

    • Carrie says:

      I had the same thing happen. Not only did the company raise my rate to 27.99%, but they cut my available credit to the balance I owed. I pride myself on paying my bills on time & using my credit card only for emergency situations, but now I find myself with a lower credit score b/c of it. All I was trying to do is use my credit card wisely. This is all so frustrating.

  9. HEATHER says:

    If I have collections on my report, can I contact them to pay them off and when will it be removed from my report? I have collections for 42 and so forth that I knew nothing about!

    • Matt says:

      No, they will most likely not remove them from your report, but you can always ask them to remove it. It will however improve your score still, showing that you paid your collection.

  10. Kelsey says:

    I have heard that when you check your credit score your score actually lowers. True or false?

    • RH says:

      False – it does not hurt your credit score when you pull your own report.

  11. Sela Wood says:

    I wanted to find out what advice you would give to me. A few years ago I withdrew some of my 401k money to help my parents get out of a financial bind. I also withdrew some money off my credit card, hoping to pay it off after a few months, however the interest just keeps getting bigger and I am unable to get ahead as my interest charged on my cc is 19.99%. I still have some cash in my 401k and want to find out if you would advise me to withdraw a large chunk of it and pay my cc off completely, as I do not make as much interest on my investments as the cc company is charging me. Also, I have thought of going to debt counselling and want to find out if by going with one of those firms, will my credit score be affected? If I do sign up with one of these companies, will I lose my credit cards? Your help would be much appreciated.

  12. Annie Mack says:

    Actually disputing errors on your credit report are meaningless. They get back to you and say, ‘yep, it’s your debt’. Well, it’s not my debt and after 3 certified letter to the creditor, they still haven’t provided the information I’ve asked them for. So, unless I’m willing to go to court or pay for a lawyer, I have a collection for $388 on my credit that I can’t have removed. The lawyer would charge me that for one hour of work. Until someone turns the credit merry-go-round in our favor, we’re all screwed.

  13. John says:

    I am writing to agree with all you say about raising your credit score. I have raised mine by over 130 points to near excellent simply by following your suggestions. I have found it especially true when using the “credit report” itself and not simply using the so called “free scores”. Free scores ONLY give you a starting point. I found so many errors on my actual “credit report” it was disgusting. All three credit bureaus had multitudes of incorrect or outdated information and a person MUST dispute those errors. It is not easy and very time consuming. Case in point, my old bank was bought out by another bank and all three bureaus said my credit was adversly effected because too many accounts were too new. ALL of the accounts that had been transfrred into another banks name were at least five years old and in the case of my home mortgage, that account was over ten years old. They reported these as “new accounts” and that simply was not true. Fight for your credit rights and follow the examples set forth in the blog and you will soon find yourself on the way to better credit scores, interest rates and simply a good feeling inside that you are being treated fairly.

  14. Kim says:

    trying to get a car, was financed w/ my previous car for 72mo. loan w/ 8% interest and a co-signer@ Wells FARGO…I, repeat I made all payments for 4yrs. on time, car was totaled last mo., my ins. PROGRESSIVE paid all but $1335 and I paid that myself, so car is PAID OFF!!! I went car shopping hoping my credit had finally creeped up enough I didn’t need a co-signer!!!! NO, not sure why, so my question is, is it possible that the credit report is still showing that is an open account and if so, how do I find out!
    SO Wells Fargo got over $26,000 in 4yrs and they wouldn’t give me a loan!!! WT??????????????????//

    • DR says:

      Kim, step one would be to get a copy of your credit report from annualcreditreport.com to see if the account is still shown as open. If it is, call and write Wells Fargo to get them to update your credit history. Also keep in mind that there could be other aspects of your credit history affecting your ability to get financing.

  15. Bonnie says:

    Annie Mack- In your case, you must file a claim with the FTC (federal trade commissioner) the OCC (office of the comptroller of currency) and finally, your State Attorney General. The Attorney General will mediate your claim, free of charge. Be Sure to have all documentation, dates and any other steps you have taken, ready to submit to these agencies to expedite the handling of your claim.
    One last thought, the credit bureaus ARE NOT OMNIPOTENT GOVERNMENT AGENCIES! -although they behave that way. In fact, what I believe to be true is the big bank credit card companies created them!!
    Perstistance Pays!! Contact the 3 above mentioned Goverment Agencies that were created to help the consumer against the predatory practices of the creditcard companies! Best of Luck!

  16. mrsholi says:

    I too have raised my score by doing the work myself. It is time-consuming. But it works. Raised my score 90+ points by disputing, and pfd letters. It took about four months to see an increase.

  17. John says:

    Just wanted to educate people on the new practices of new car dealerships in the midst of the economic situations. It came to my attention last Feb. when i went to my local credit union to get pre approved for a new car loan. Well the credit score was actually higher than I thought it would be. I got approved and then went about to look for a new car. This is where the trouble started. Looks as though dealerships want to sell you on a credit company that gives them kickbacks instead of the pre approved line of credit you tell them you already have. If you find you are asked to sign a waiver for a credit check beware. In my case the dealership wanted to sell me a car I couldn’t afford ( I even told them NO WAY)so they kept (without my knowledge)seeking a company that would approve my credit. In my case I had a C line of credit and was denied a loan for a car I told them I couldn’t afford to pay for. I have 23 denials for credit that came through snail mail I didn’t even ask for. But hey ! This came about from two car dealerships 50 miles apart within a two week period. Anyone have any idea’s of how i fix this mess? My score dropped a whopping 56 points I now have a D credit score. I did buy a new car, the car i wanted to buy that I could afford and was 2 thousand dollars less than my pre approved loan. But getting the dealer to except my offer was painstaking. This behavior should be against the law.

    • kate says:

      Same thing happened to me. Preapproved by credit union, dealership ran my credit through their own credit system anyway, got 4 denials from major banks. I called the dealership and told them what I thought of this practice, seeing how it was unnecessary in the first place, and was told that these hard hits on my credit report would not matter, would cause no damage to my credit score. But of course it did! Why the dealership would do this to me for no apparent reason, I do not know. You must tell them not to do this. Tell them right away as soon as you decide to buy a car there, because by the time you’re brought in to sign the final papers, they’re already running your financial info through their own system.

      Also, if you’re using their system, you may note that the credit score you had at the time you went in is not nearly as high as the credit score they’re telling you you have, that all of a sudden it’s much lower, thus they need to charge you a higher interest rate.

  18. Rich says:

    How do you improve your credit score after filing bankrupsy

  19. kelly says:

    I just added my husband as an authorized user on a credit card that reports monthly to all credit bureaus, so I was wondering if that will show up on his report by May 1st. We are trying to buy a home and only need four points increased on his score to get approved and I was wondering if that would do it. Please help asap.

    • Rob Berger says:

      Kelly, first my apologies for not responding to your question sooner. Somehow your comment slipped past me. According to FICO, the creator of the credit score, being an authorized user on a credit card can improve your credit (http://www.myfico.com/crediteducation/questions/fico8.aspx). However, it likely will not happen inside of a week.

  20. Sonja says:

    I’m trying to get my last few credit cards totally paid off. Would it hurt my credit score if I closed all of my credit cards except for one.

    Also, how do you feel about department store credit cards?

    • Rob Berger says:

      Sonja, it probably would hurt your score to close all of your cards but one. One factor in the FICO formula is credit utilization–how much of your available credit have you used. By closing all but one card, you lower your available credit.

      Department store credit cards can be one way to build credit. They usually come with high interest rates, however, so be sure to pay them in full each month.

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