Don’t believe the hype from fly-by-night companies that claim to be able to raise your credit score magically, especially if they say they can make negative credit information disappear. They can’t. There is no magic, but with diligence and a little time, you can raise your own credit score legitimately. Here are some critical things you need to know.
- The number one rule should be obvious, and cannot be stressed enough… pay bills on time.
- Have credit cards, but use them wisely. A good rule of thumb is, if you don’t have the cash, you cannot afford the purchase.
- Keep your credit balances low in relation to your available credit. This demonstrates that you are not over-relying on credit to get by.
- Keep tabs on your credit score by getting a copy of your credit report at least once a year.
- Plan ahead. Improving your credit score can take three to six months…. maybe longer. If your score is lower than it should be, you might want to put the application off for a few months.
- Don’t open new accounts, but don’t close existing ones. Opening new accounts too close to refinancing could make you appear overextended. On the other hand, if you close existing accounts, your score could drop. This may sound counter-intuitive, but your credit score is made up of many factors. One factor is the length of time you’ve had credit. Closing your oldest accounts could artificially shorten that time. Another factor is your overall credit balance compared to your available credit. Closing an account doesn’t change your credit balance, but it shrinks your available credit. Even though nothing has really changed, the percentage of available credit you have used appears larger, and that is a definite negative.
The Federal Trade Commission (FTC) warns consumers to be wary of “free credit report” companies. Some of these companies use deceptive advertising to give the impression they issue free credit reports, when in reality, they attempt to lock consumers into paying a monthly fee. Log onto the FTC Web site to find out how to get your free annual credit report.