How to IMPROVE Your Credit Score

Considering the small amount of time it could potentially take to really damage your FICO score, improving your credit score is not an overnight process. It actually takes time to build it back up. The good thing is that there are many things a person can do in order to raise their credit score. Below is a list of helpful hints organized by credit score data category.

Category: Payment History

Don’t miss any more payments. Pay those bills on time!
Any delinquent payments and/or any time collections gets involved has a very negative effect on your credit score.
In fact, reports to collections agencies will stay on a person’s credit report for seven years and simply paying off amounts due to collections agencies will not erase the record of delinquent payments.
Make sure what is going to be owed can be covered. Possibly consider consolidating debts or contacting a professional credit counselor if the amounts owed are going to end up delinquent. This way , at least the credit score will not be severely damaged in the future.
And if you have any outstanding payments due at the moment then make sure those are paid. There are many different types of smaller loans individuals can get in order to pay off missed payments.

Category: Amounts Owed

First, the best way to deal with a possibly ‘amounts owed’ issue would be to prevent the amounts from getting too high. There are many ways people have dealt with this issue including, applying for more credit, transferring balances, and/or just using up more available credit. The best way to raise your credit score is just to pay off what is owed. Simply creating more available credit or moving balances around will only result in a lower credit score ultimately.
The reason that simply shifting balances can lower your FICO score is because it shows that balances are not getting paid down. The balances are remaining the same. This is all taken into account when a credit score is calculated.
If an individual decides to just open more credit card or revolving debt accounts in order to “make room” for the growing balance, the result could be disastrous as there will be many negative marks going against a person, even though it appears as though they have more available credit. New accounts will have a negative affect on the average length of your credit history.

Category: Length of Credit History

As recently mentioned, opening new accounts in order to create more “breathing room” for increasing credit balances will only have more megative than positive outcomes. The overall average length of your credit history will begin to diminish. The length of time your accounts have been open is an important factor when calculating a FICO credit score and it should be kept to a minimum. This factor is not only limited to the actual opening of a new revolving credit account, but also any inquiries towards opening any other types of lines of credit or loans.

Category: New Credit Inquiries

There is a significant different between checking or inquiring about your credit score versus searching for new lines of credit. Checking your own score will not affect your credit score in any way. It is actually a good thing to keep a regular check on your FICO credit score at least monthly in order to find out if anything is negatively affecting your score or there are any sudden errors in your credit score that need to be corrected immediately in order to prevent any problems when it comes time to really put your FICO score to work.
However, if a person is searching for a loan or new line of credit and there have been many inquiries in a short period of time on their credit score versus just one, this can create a very negative effect on their FICO score.
New credit accounts can actually help an individual if they have already had problems with their credit if they are consistently making their payments. It may take a little time before the substantial positive effects begin to show, but in the long run the improvements will make the efforts all worthwhile.

Category: Types of Credit

Having different types of credit lines that are being paid off will definitely have a positive effect on your credit score; however, it is not because of the different types of accounts. It is merely because they are being paid off on time. Having a ‘smorgasboard’ of different types of credit do not have a more positive influence on a person’s credit rating.
It has also been believed that closing some accounts will really give your credit score a boost. This is not exactly true, however. The accounts, once opened, will always show up on your credit report which means that these accounts could be considered in the data used to calculate your FICO credit score.
But a person who has NO credit history puts themselves at a much larger disadvantage when it comes time to apply for a loan as it is quite obvious that they show no evidence that they would know how to manage payments on a line of credit responsibly. Ultimately, it will improve your credit score just by paying something off regualarly.