Question:
“Can you share any tips on how to improve someone’s credit score?”
Answer:
Here are several smart ways to improve your credit score…
1. Carefully review your credit report
Most credit reports have at least one error that will lower your score. Read your credit report line by line and report any errors in writing to the credit bureau. (If you correct an error with one credit bureau, all three will get updated).
2. Reduce credit card balances
High balances on multiple cards pull down your score. Easier said than done, but work to pay them off, especially if you have monthly debt greater than 33% of your gross monthly income.
3. Don’t cancel any credit cards
Cancelling cards hurts your credit-utilization ratio (the % of debt you have compared to available credit). If you have five credit cards with $1,000 credit limit each, you’ve got $5,000 of available credit. If you maxed out two at $1,000 each, you’re still using under half of your $5,000 available credit. But if you cancel two cards, you’d be carrying $2,000 worth of debt out of $3,000 of available credit. That hurts your score.
4. Don’t get any new cards, either.
Opening several new accounts makes you look desperate for some quick cash, and can raise some alarms.
5. …Unless you have no credit cards at all.
If you don’t have any, get a couple and use them responsibly. This build your score nicely.
6. Always pay all your bills on time
Just like your momma told you.
7. But if you’ve been bad (i.e.) late, ask for forgiveness.
If you’ve been a good customer, a lender may agree erase one or two late payments from your credit history. You should request it in writing, and your chances for a “goodwill adjustment” improve the better your record with the company.
Hope that helps!
