10 Ways to Dramatically Improve Your Credit Score

(This is a guest article by Karen Schweitzer*)

Everyone knows that paying bills on time will have a positive impact on credit scores. What many people don’t realize is that there are lots of other ways to improve your score--no matter how low it is. Here are 10 tips to keep in mind:

Check your report for errors. A low credit score can sometimes be a byproduct of errors on your credit report. Since an estimated four out of five reports have errors on them, there is a very good chance that yours does as well. If you do find an error, you can dispute it with creditors and the three credit bureaus before any more harm is done to your score.

Add as much info as you can. Depending on what is already included, adding information to your credit report can sometimes increase your credit score. Things to add include: birth date, address, telephone numbers, bank account numbers, and employer.

Get a credit card. Getting a credit card is a good way to establish credit history. The longer your credit history is, the better it is for your score. And when you use credit and pay it back responsibly, it impacts your score in other positive ways.

Piggyback on someone else's card. When you add your name to someone else's credit card account, you can piggyback on their good credit. Every time they make a charge and pay it off, it helps your credit score. One warning--only do this if you are absolutely sure that the person with the account is responsible and able to make the required payments. Late payments or slow payments on the card can have a negative impact on your score.

Request higher limits. When coupled with low balances, high credit card limits can boost your credit score. Most credit card companies will up your credit limit if you make the request. If you're a good customer, you can request and get higher limits several times throughout the year.

Negotiate better terms. Having better terms (lower interest rates) on your credit cards can make them easier to pay on time. And as everyone knows, paying on time is the best way to steadily improve your credit score.

Re-open closed accounts - Closing an account is never a good idea. Even if you don’t want to use a particular card anymore, you should still keep the account open. Long credit histories are always better than short credit histories. If you recently closed an account, call the creditor and request to re-open the SAME account. Within a few weeks, you'll probably see a double-digit increase in your score.

Get a loan. Getting and paying regularly on car loans, personal loans, student loans, home equity loans, and other types of credit typically issued by banks can lead to double-digit improvements in your credit score in just a few months time. Be careful not to make any late payments through. Just one late payment on a loan can undo months of dedication and hard work.

Lower your debt. This is usually easier said than done, but it is a good way to improve your credit score. Having a low debt-to-income ratio makes it easier to get a loan. It also makes it easier to pump your score up in a few months time.

Pay off old debts. Old debts and past due accounts can be a huge drain on your score. Even small bills of less than $100 will drag your score down. Paying off these old debts will not create an immediate boost in your score, but it will prevent the debts from working against you as you try to employ other score-hoisting tactics.

*About the author: This is a guest post by education writer Karen Schweitzer. Karen is the About.com Guide to Business School. She also writes about online courses for OnlineCourses.org.

*Image Credit: Photograph by khalid almasoud [via Flickr Creative Commons]

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