- Pay your bills on time. Delinquent payments and collections can have a major negative impact on your score.
- If you have missed payments, get current and stay current. The longer you pay your bills on time, the better your score.
- Be aware that paying off a collection account, or closing an account on which you previously missed a payment, will not remove it from your credit report. The score will still consider this information, because it reflects your past credit pattern.
- If you are having trouble making ends meet, contact your creditors or see a legitimate credit counselor. This won’t improve your score immediately, but if you can begin to manage your credit and pay on time, your score will get better over time. And seeking assistance from a credit counseling service will not hurt your score.
- Avoid credit repair agencies that charge a fee to improve your score by removing negative, but accurate, information from your credit report. No one can force credit bureaus or lenders to remove accurate information from a credit report. Credit repair companies often take your money without delivering what they promise.
- Keep balances low on credit cards and other “revolving credit.” High outstanding debt can affect a score.
- Pay off debt rather than moving it around. The most effective way to improve your score in this area is by paying down your revolving credit.
- Don’t close unused credit cards as a short- term strategy to raise your score. Owing the same amount but having fewer open accounts may lower your score.
- Don’t open a number of new credit cards that you don’t need, just to increase your available credit. This approach could backfire and actually lower your score.
- If you have been managing credit for a short time, don’t open a lot of new accounts too rapidly. New accounts will lower your average account age, which will have a larger effect on your score if you don’t have a lot of other credit information. Even if you have used credit for a long time, opening a new account can still lower your score.
- Do your rate shopping for a given auto or mortgage loan within a short period of time. FICO scores distinguish between a search for a single loan and a search for many new credit lines, in part by the length of time over which inquiries occur.
- Be careful about opening new accounts that you don’t need. Opening new accounts can lower your score in the short term. Beware of discounts or low interest rates being offered to entice you to open a new charge account that you don’t need.
- Re-establish your credit history if you have had problems. Opening new accounts responsibly and paying them off on time will raise your score in the long term.
- Note that it’s OK to request and check your own credit report and your own FICO score. This won’t affect your score, as long as you order your credit report directly from the credit reporting agency or through an organization authorized to provide credit reports to consumers, like myFICO.com.
- Apply for and open new credit accounts only as needed. Don’t open accounts just to have a better credit mix— it probably won’t raise your score.
- Have credit cards—but manage them responsibly. In general, having credit cards and installment loans (and making timely payments) will raise your score. People with no credit cards, for example, tend to be higher risk than people who have managed credit cards responsibly.
- Note that closing an account doesn’t make it go away. A closed account will still show up on your credit report, and will be considered by the score.
For an in depth look at how your credit score is calculated and weighted, please take a look at this FREE 24 page report on Understanding Your Credit Score.