Improving Your Score
Credit scores usually fall between 300-850 points. Generally, the lower your score, the more risky investment you may appear to lenders or other creditors. Scores are often used as a "predictor" of how likely you are to pay back a loan or default, and can even be used to determine what level of card you may be eligible for and what type of interest rate you may qualify for.
What should you do if you obtain your credit score and it is lower than you expected? Here are some steps you can take to improve your score. Don't panic—it CAN be done!
- First, check to make sure your report is accurate, and correct any inconsistencies as soon as possible. Mistakes do happen, so be sure to review your report closely to be sure nothing is out of order! If you do find an error, contact the credit bureaus immediately to alert them to the problem, and ask them to include a written statement on your credit report letting others know you are sorting out the issue.
- If you made late payments on your loans or credit cards due to illness or other emergencies, make sure you contact the credit bureaus and ask them to indicate the reasons for your delinquencies on your report. They will include a short explanation for you so others will be informed of your situation.
- Try to limit the total amount of inquiries on your credit report over a twelve month period. Each time you apply for a new credit card, charge card or other loan, the lender accesses your report and the inquiry is reflected, which can negatively impact your score. Keep these inquiries to a minimum when trying to repair your score by only applying for new accounts when you really need them.
- If you owe money on your loans or credit cards that you know you cannot pay, contact your lender(s) immediately to see if you can devise a payment schedule. Showing a good-faith effort often goes a long way in these situations.
- Sometimes, applying for a small loan and paying it off quickly (and on time each month) can help rebuild your score.
- Most important, pay all of your credit card bills or loan payments on time, every month. Even if you are only 30 days late with a payment, it will sometimes be reflected in your credit report, so be sure to be vigilant about paying your bills.