Your credit score can make or break you, whether you’re applying for a new job, renting a house or trying to get a loan. To improve your credit score, you must be prepared to go through your credit report with a fine-toothed comb and commit to paying down your debt so that you can see positive changes reflected as soon as possible. Since creditors report changes to the credit bureaus at different intervals, changes are reflected between 30 days to three months. The sooner you take positive steps to improving your credit, the sooner your credit score will rise.
Get a free copy of your credit report. According to the Fair Credit Reporting Act, everyone is entitled to a free copy of their credit report through each of the three credit bureaus or through the Federal government’s Annual Credit Report website (see Resources). The Federal Trade Commission warns against using so-called free credit reporting websites that are not part of the legally mandated Federal program, as they may charge fees for other services.
Review your credit report and report any errors immediately. Errors to watch out for are listings for accounts that you don’t have, reports of late payments that are inaccurate, bankruptcies older than 10 years, accounts with balances that were wiped out by bankruptcies but which are listed as still being due, and any negative information older than seven years. Write a letter to the credit reporting agency and the creditor detailing the errors, and include copies (not originals) of all supporting documents. According to the Federal Trade Commission, credit bureaus usually investigate the errors and make necessary changes within 30 days.
Pay down the balances on your credit cards. According to CNN Money, the second biggest factor after paying your cards on time is your credit-to-debt ratio. Your credit-to-debt ratio is how much of a balance you’re carrying in relationship to how much credit you have. You should aim to pay down your balances to 20 percent of your credit limit. Once you pay down your balance, the creditors will report the improvement to the credit bureaus and you will see the positive impact on your score; however, this process takes between one to three months depending on how often your credit card makes reports to the credit bureaus.
Use an old credit card. Having old accounts is beneficial to your credit score; however, if you stop using a card, creditors may stop reporting your account to the credit bureaus. Make a small charge to the card and then pay it off at the end of the month. Think of it as jump-starting a car that has been sitting in one place for too long.
Joy Uyeno has been writing about travel, food, fashion, culture and finance since 2005. For three years she wrote a column for the "Honolulu Star-Bulletin" aimed at young and first-time travelers. Her writing has appeared in several local and national publications, including the 2008 anthology "Honolulu Stories." She holds a Master of Arts in writing and publishing from Emerson College.