Boosting your Credit Score

Your credit score is your LIFE as it can give a current or prospective lender insight on your character (or your propensity to repay the debt). What does your credit score say about you? Have you ordered your credit report this year? Every American is entitled to one FREE credit report a year. Visit annualcreditreport.com to get a copy of your report from each of the three credit bureaus: Equifax, Experian, and TransUnion. To obtain your credit score (also known as your FICO score); you will have to pay a fee. If you visit myFICO.com they will give you the Equifax score for free.

So, you’ve obtained your credit report and scores, but didn't get that 700 you were shooting for…it’s ok…pick your chin up and follow these tips to improve your score:

1. Check your Report for Errors—Go over your credit report with a fine-toothed comb looking for errors that could hurt your score. You are looking for the following:

• Late payments, charge-offs, collections and other items that aren’t yours.
• Credit limits that are lower than they should be.
• Items over 7 years old, which should have fallen off the report.

If you find one, contact the creditor and the agency reporting the discrepancy to dispute the item. This may be a painstaking process taking over 30 days to rectify, but it’s in your best interest.


2. Pay Your Credit Card Bills on Time—This is critical! If you can, pay off the balance in full each month. If not, strive to make the minimum payment. Paying your bills late lowers your credit score and may result in a higher interest rate.

With our busy lives, it’s easy to miss the payment date, but there are lots of tools to help you remember. Set a reminder in your cell phone, use the calendar in your email account, or use the automatic bill pay feature from your creditor or bank to set a regular payment date in advance of the due date. These options only take a few minutes to set up, but can save you a lot of frustration later.

Also, if you’ve been a good customer, but just happened to miss a payment talk with your lender, explain the situation, and ask them to waive the late fee (most likely they will). A word of caution: don’t try to do this more than once within a 12 month period, because they won’t buy it.


3. Pay off Collections or Judgments First—While paying off a collection account or judgment won’t be removed from your credit report for seven years, paying off the item will boost your score.


4. Improve your Outstanding Balance to Total Available Credit Ratio—A portion of your credit score is determined by how much credit you have already used compared to your available credit line. When you are close to the max it signals, to creditors, that you may be having financial difficulty. Try to keep this ratio around 30%.

Example: If you have a credit card with a $5,000 credit line, try to keep the outstanding balance below $1,500.


5. Don’t Close your Credit Accounts—Part of your credit score is based on how long you’ve had the account. Closing the account removes this history, which may lower your score. It’s better to keep long-standing accounts open with a zero balance.


6. Don’t Shop Around for Credit—We’ve all been tempted to do this...we want to save an extra 10% by opening a new charge card at the local department store. Well my friends please resist the urge. Every time an organization requests your credit report, an inquiry notation is made in your file, which dings your credit score. Too many inquiries signal that you are looking for new credit, which may lower your score.

7. Pay off Debt, Don’t Reshuffle it—Even though you’ve just received an offer to consolidate higher balances on one card to another, this may not help your score. One of the factors affecting your score is your outstanding balance/ available credit line ratio (discussed in Tip #4). Moving the debt from one card, will lower the ratio on that card only, but will increase the ratio on the other one; thereby leaving you with the same result (nothing gained). Reshuffling balances may work to lower your interest rate, but you should then focus your efforts on paying off that account.


8. Get at Least One Credit Card—For some, our parents told us that credit is evil and we need to stay away from it, but this simply isn’t true. Not having an established credit history is just as damaging as poorly managing your credit. Plus, how can you get a credit score if you don’t have credit? It’s best to open at least one card. Fill up your tank or buy groceries, but make sure you can pay the bill off in full when it arrives. This will allow you to establish a good credit history and credit score.



These tips will help anyone improve a credit score less than 700. If you’ve made it past the 700 mark, CONGRATS!! You can still implement some of these measures, but may not see the same improvement as others.

Remember, take it slow. Fix what you can, when you can. Improving your credit score is essential to obtaining the lowest interest rates on mortgages, automobiles, and credit cards, which can save you thousands of dollars over the years.

I hope you found these tips helpful. If you have any specific questions, unique to your situation, please send me a private message on LinkedIn or Facebook.