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How to Raise Your Credit Score

The all important metric of the credit score has become so central to evaluations of one's credit worthiness that it is easy to become fixated on how to raise this value using simple methods. This is not possible. Raising your credit score involves a wide ranging series of corrections and adjustments in the management of your finances which result in better habits which in turn -over time- become reflected in your reporting bureau files and -as a result of this- in your score value.

For this reason, quick fixes are not possible and companies promising this should be avoided altogether. Because a change in behavior is required, raising your credit score is something you should undertake yourself as a mid to long term project. It involves taking the time to understand how your overall financial situation is viewed by the relevant agencies and altering behaviors that negatively influence this.

As we have noted in our article specifically describing the FICO CreditScore, there are five main variables contributing to the value of your score. Although these reference FICO's version, they can be generally applied across the board when thinking about how score values are determined (for more on other scoring systems, see our article Understanding Credit Scores). The five factors are:

  1. Payments track record
  2. Debt to Credit-Limit Ratio
  3. Duration of credit history
  4. Forms of credit analysis
  5. Factor analyzing new credit sought
The first order of business before trying to raise your score, however is to be certain of the information appearing on your credit report and to correct any errors therein as fully and quickly as possible. You need to get a copy of your report from all three bureaus - Equifax, Experian and Transunion. Fortunately, since you are entitled to one free report from each of them during any 12 month period, they have teamed up to make obtaining such a copy convenient through the Annual Credit Report partnership. Once you have these copies, we have detailed how to correct reporting errors in our article on Checking Your Credit Report.

It is now time to address the five components contributing to your score and to learn how to boost them:

Payment Track Record

This contributes a whopping 35% to your credit score. All manner of everyday bill payments: utility bills, rent, car payments, credit cards, insurance etc. may be reported to the credit bureaus. Most are reported on a regular basis as a normal procedure. Late rental & bill payments are usually reported when you are late. You must absolutely keep up with your bill payments and avoid falling behind at all costs. Late payment records are a huge no-no and can negatively affect your score considerably. If you do fall behind in payments, you must rectify the situation as quickly as possible.

If you are in a situation, with your rent for example, where you are in good terms with your landlord, discuss your situation with him/her and make arrangements to pay up such that s/he does not take the step of reporting you to the credit bureaus. Similarly, contact your utility company if you fall behind and make an honest attempt at getting them to be confident that you will settle up in short order.

A long track record of consistent on time payments with no blemishes is what you are looking for.

Debt to Credit-Limit Ratio

This is a nuanced criterion. One important factor is the number of credit lines you have open. Although it is true that a larger, more varied variety of open lines is important, it is also important not to open these too fast. Control is the key here. The other key is to show a record of paying down your debt across the lines of credit you have. When it comes to your credit cards, note that the reporting bureaus also consider the amount of charges you have on a card at particular intervals in time. So limit your charges every month and keep them under control. Pay cash when you can.

Duration of credit history

This is self explanatory and indicates one reason why quick fixes are not advisable. You really cannot control this and it is not a good idea to try gimmicky ways to make things seem as if you have a longer credit history than you actually have.

Forms of credit analysis

This is another nuanced factor which the credit institutions do not release a lot of information about. Furthermore, it is difficult to know how constant the criteria for evaluating this are and how these vary over time. But it is true to say that a broad range of good types of debt and credit lines is long as your debts are controlled as described previously. These good lines include some of the most normal types: mortgages, credit cards, insurance, credit lines with reputable retailers etc. You don't want there to be an inordinate amount of debt associated to any of cards, for example.

Factor analyzing new credit sought

The idea here is not to have evidence of irresponsible and profligate commitment to new types of debt. Open new accounts wisely and for the right, healthy kinds of debt. Have evidence of having paid down other debts before acquiring new lines. If you need credit counseling, by all means obtain this rather than being tempted to resolve to using revolving credit. Obtaining credit counseling is a topic unto itself. We have addressed this in our articles on fixing your credit report and in our look at the nonprofit National Foundation for Credit Counseling, which we highly endorse if you need professional help. We also reccommend The website Bad Credit Advisor for Credit Counseling - Guides to Consumer Credit Counseling (CCCS) for more information, articles and resources.


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