A credit score can have a major impact on your life. Certain jobs won't consider you if you have credit problems; you may be denied credit when you really need it; or you may pay ridiculously high interest rates for credit extended to you. Your low credit rating can also affect your partner if he needs a high clearance level for his job or if you are planning to purchase a home or car together. Faltering on your credit obligations lowers your score. However, there are things you can do to increase your score and eventually maintain a good credit score.
Order a copy of your credit report from the three major credit bureaus: Experian, Equifax and TransUnion. Order all three reports from the AnnualCreditReport.com website. You are entitled to receive a free copy of your credit report from each of the bureaus once per year, per the Federal Trade Commission. You may have to pay to obtain your actual score, unless you subscribe to a credit monitoring service.
Check your credit reports for accuracy. Any accounts that have been reported late or contain false negative information can be challenged and ultimately removed from your reports, thereby increasing your score.
Write a dispute letter to the credit bureau that has incorrect or false information. The FTC offers a sample dispute letter at its website that you can use. Include any proof you have that the information is inaccurate. This process can be lengthy, but it is worth it to increase your score.
Pay off any negative, closed or charged-off accounts. Contact the creditor to offer a settlement or ask if they would be willing to settle the debt if you can't pay it in full. Tackle the negative accounts one at a time, if necessary. Negative accounts still affect your score, although not as severely as they would if you don't pay or settle the accounts.
Maintain positive accounts, or open new accounts to raise your score. Pay more than the minimum monthly payment or pay off your credit cards in full each month. CNN's Clark Howard and MSN Money's Liz Pulliam Weston advise consumers to keep their credit card balances to less than 30 percent of their available credit, which increases your credit rating. Making on-time payments and managing your available credit is the fastest and most efficient way to raise your credit score.
- Open secured credit card accounts or loans if you can't get a traditional account. Most financial institutions will extend the same amount of credit as you deposit into a savings account, although you will not be able to withdraw from the account.
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