Payment History Tips
Contributing 35% to a FICO Score Calculation, this category has the greatest effect on improving your scores, but past problems like missed or late payments are not easily fixed.
- Pay your bills on time.
- If you have missed payments, get current and stay current.
- Be aware that paying off a collection account will not remove it from your credit report.
- If you are having trouble making ends meet, contact your creditors or see a legitimate credit counselor.
Amounts Owed Tips
This category contributes 30% to a FICO Score's calculation and can be easier to clean up than payment history, but that requires financial discipline and understanding the tips below.
- Keep balances low on credit cards and other 'revolving credit'
- Pay off debt rather than moving it around
- Don't close unused credit cards as a short term strategy to raise your scores.
- Don't open a number of new credit cards that you don't need, just to increase your available credit.
Length of Credit History Tips
- If you have been managing credit for a short time, don't open a lot of new accounts to rapidly.
New Credit Tips
- Do your rate shopping for a given loan within a focused period of time.
- Re-establish your credit history if you have had problems.
- Note that it's okay to request and check your own credit report.
Types of Credit Use Tips
- Apply for and open new credit accounts only as needed.
- Have credit cards - but manage them responsibly.
- Note that closing an account doesn't make it go away.
To summarize, "fixing" a credit score is more about fixing errors in your credit history (if they exist) and then following the guidelines above to maintain consistent, good credit history. Raising your scores after a poor mark on your report or building credit for the first time will.
Written by: Geoff Smith
Website: http://lendtheway.com/geoffsmith
