How to Raise Your Credit Score

Your credit score impacts everything from how much money you can borrow, to what interest rate you’ll pay, to whether or not your application for a home or apartment rental will be accepted. Without proactive steps, your credit score can easily fall into a range where it makes it hard to succeed financially. If your credit score is less than ideal, here are some ways to raise it.

Check For Misinformation

Negative entries on your credit report prevent your credit score from going higher to a certain degree. Negative entries include things like late credit card payments, vehicle repossessions, late rent payments, bankruptcies and collections reports. Getting rid of them can instantly raise your credit score by a few points.
Credit reporting agencies won’t delete negative entries that are accurate. But they will delete them if there is wrong information. The good thing for you is that the wrong information can be anything from serious inaccuracies to innocuous incorrect addresses.

Pore over the negative entries on your credit report and look for misinformation. Check the accuracy of noted address and telephone numbers, dates and currency amounts. If you see something that’s wrong, even something small, you might be able to have it removed from your credit report. Any removal of negative entries will raise your credit score.

Every credit reporting agency has their own negative entry removal process, but in general, you will submit your report of the negative entry, along with the reason and any backup information you have to support your reason. The credit company (your credit card company, car loan loan company, etc.) has 30 days to dispute your claim. If they can’t prove that the negative entry is indeed correct, it will automatically come off your credit report.

Pay Off Credit Cards

Your credit score is calculated in part from your debt-to-income-ratio. Any reduction in your debt will result in a few points being added to your score. Therefore, if you pay down one or more debts, such as credit cards, your score will go up. You don’t even have to pay off the entire balance to see an increase in your credit score. But the more you pay down, the more points you’ll be rewarded. Remember, your credit score is constantly being recalculated based on current information. So once you pay down a credit card, don’t rack up charges on it again. Pay it down and keep it down in order to achieve the highest credit score possible.

Ask For a Credit Line Increase

Leveraging the same debt-to-income-ratio calculation, you can get a few points added to your credit score by getting a credit line increase on your credit card. Even if your debt balance remains the same, a credit line increase will raise your score because your debt-to-income-ratio will go down. Keep in mind that if you immediately charge against that new credit line increase, your score will not go up.

Pay on Time, Every Time

Your credit score is also partially calculated by your history of on-time payments. You can’t go back in time, but you can ensure that future payments are received on time, every time. While this may be a no-brainer, there are pitfalls to be aware of that didn’t exist years ago. First, some credit card companies, primarily those for “bad credit” customers, only accept online payments before 5 p.m. in the designated time zone. So if you go online to make a same day payment after 5 p.m., it may be recorded as a late payment, arriving on the next day. Another pitfall is using online bill payment services like BillPay.com. These companies send out your payment so you don’t have to, but they take extra days to arrive. This makes it very difficult to time your payments so that they arrive by the due date. If you have trouble getting payments in on time, take total control and set up your calendar and reminders and then pay your bills by yourself online, by the day before they are actually due.

Avoid Hard Credit Inquiries

Credit inquiries are notations on your credit report that indicate when a lender has delved into your credit report for the purposes of qualifying you for a loan. There are two kinds of credit inquiries; hard and soft. Soft credit inquiries are those where a lender has not “opened the door,” to your credit history, but they have taken a superficial look at your credit profile. Soft credit inquiries are not noted on your credit report. (Also, your own personal inquiries into your credit report are not noted.)
Hard inquiries are those where a lender is considering you for a loan and reviewing every detail of your credit report. Hard inquiries bring down your credit score by a few points. They indicate that you are searching for money or a line of credit, and hint that you might be having money problems.

Avoid these hard inquiries as much as possible. You may be looking for a car loan or a mortgage; this is fine and understandable. Just bear in mind that hard inquiries from places like credit card companies and personal loan lenders don’t look good on your report, and will bring down your credit score by a few points.

Note that changes to your credit score take time; typically about 30 days. Don’t give up. Taking the steps mentioned above will work. Going forward, the best way to raise and maintain your credit score is to monitor it closely so you can see firsthand how your actions are affecting your score. Consider subscribing to a credit monitoring service where you can see your credit score and report from all three credit reporting agencies. By monitoring credit and being vigilant where your credit is concerned, you’re virtually guaranteed to raise your credit score over time.