1. Dispute errors…even the small ones
Your first step: Order a copy of all three credit reports from the major players – Equifax, TransUnion, and Experian. You can order one free copy per year from each credit bureau through AnnualCreditReport.com or CreditKarma.com. Order your reports, print a copy, and start reviewing.
Look for the big errors first, things like accounts that don’t belong to you, paid balances that are showing as unpaid, and credit limits that are reported incorrectly. Highlight each one of these errors and then dispute them with the credit bureau. You can file a dispute online through each of the credit bureaus’ websites:
Equifax: Online Dispute
Experian: Dispute Your Credit Report Online
TransUnion: Initiate a Dispute on Your Credit Profile
After you dispute the big stuff, financial advisers will tell you not to sweat the small things like credit inquires or incorrect dates. Don't listen. Instead, dispute everything, thinking every point mattered. If a creditor pulled your credit without your permission, dispute it. If your credit card company reports your balance higher than it should have been six months ago, dispute it. .
By law, the credit bureaus must investigate valid claims and remove inaccurate information, but if you run into trouble, complain to the Consumer Financial Protection Bureau.
2. Add missing accounts
Once you've cleaned up your credit history, start looking for ways to build it. You can do this by looking for credit lines that could have been included in your file, but weren’t. For example, You had a cell phone in your name for 10 years, but those payments didn’t appear on your credit report. So make a list of every company you had paid monthly, contact the companies, and ask them to report my payment history to the credit bureaus. Below are the types of companies that were willing to report on your behalf:
Cable and Internet provider
Keep in mind, however, that no company is required to report your payments, on-time or not, and many utility companies won’t. So when you approach companies like those above, you’re asking for a favor, not making a demand.
3. Pay down your highest balance
If you’re carrying balances on several credit cards, it’s tempting to pay off your smaller balances first, thinking that will motivate you to attack the larger debts. But if you’re trying to boost your credit score quickly, you should start by paying off the credit card with the lowest available credit limit. For example, say you have two credit cards. One credit card has a $1,600 limit with a $400 balance, which means 25 percent of your available credit is being used. The second card has a $1,000 limit with an $800 balance, meaning 80 percent of your available credit is being utilized. In this case, the second credit card is doing worse damage to your credit score because of its higher utilization ratio. Pay it off first and your credit score will improve faster.
4. Pay by your report date, not your due date
Obviously, if you want good credit, you’ll pay your bills on or before their due date. But if you want to maintain a high credit score, it may be a good idea to pay some earlier – before balances are reported.
For example, say your credit card company reports your balance to credit reporting agencies every month on the 10th, but your bill is due on the 20th. At the first of the month you charge $5,000, but pay your bill in full on the 20th. As far as you’re concerned, you’re not carrying a balance: you got your bill and paid it by the due date. But if someone checks your credit on the 15th, the credit reporting agency will report you have a $5,000 balance.
5. Blend your credit
If you applied for an auto loan and was denied because you didn’t have a good mix of credit types. Lenders like to see that you can manage different types of credit and handle multiple accounts at once. Apply for a small installment loan (one with fixed payments and an established due date) from your bank and pay it back over 12 months. Adding installment credit to your already established revolving (credit card) credit lines will raise your score.
6. Keep using your credit cards
DO NOT CUT UP YOUR CREDIT CARDS! If you’re just trying to raise your credit score, cutting up your credit cards can be more harmful than helpful.
The bottom line – every month counts. If you can manage your credit cards, keep using them.
7. Ask for a credit line increase
Your credit utilization ratio, mentioned briefly above, is something lenders use to see how you’re managing your available credit. For example, if you have a $15,000 available credit limit and a $400 balance, you’re utilizing little of your available credit, so you look strong. If you carry that same $400 balance on a card with a $500 credit limit, you’ve borrowed nearly as much as you can, making you appear more risky.
While paying off your balance is the best solution, we found a quick fix that improved credit scores while our customers were paying off debt. Simply call your credit card company and asked if they would increase my available credit limit. They agreed and raised my limit, which lowered my overall credit utilization ratio and gave me a 15 point boost.
8. Protect your credit (once you have it)
Once your credit score is in the prime range, do everything you can to protect it. When you have several late payments, collection accounts, and charge-offs, one mistake won’t hurt you too much, but when you have a near-perfect credit score, even one late payment will cause a big drop. Make sure you pay your bills on time, don’t max out your credit cards, and never co-sign for someone else’s debt. If the co-signer doesn’t pay the bill, your credit could end up worse than ever before.
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