Six steps to raise your score 200 points

Raising your credit score by step by step 200 points is like as refurbishing a residence, it may take some work, but after the process is complete, it’s certainly well worth the effort.  Most items remain on your report for at least 7 years, so we listed some simple, actionable steps to help insure the process is worth the effort..

Step 1

Apply for your free credit report.  There’s no way to raise your score if you don’t know what’s on your report.  www.creditreport.com  and www.annualcredittreport.com.   The industry standard for credit scoring is FICO.  There’s a fee for obtaining your score, but this is the one most lender reference when scoring is concerned.  You can obtain a copy here:  http://www.myfico.com/. 

Step 2

Clear out mistakes on your credit report.  ABC News reported 90% of total credit reports have to mistakes.  Removing inaccurate items from your report is NOT the responsibility of the reporting agency.  You MUST request removal of inaccurate information.  

Step 3

Please check your credit report details to ensure your credit limits are right for every credit card. Available credit is 30% of your FICO score.  To view the percentage and components to determine your FICO, follow this link: http://www.myfico.com/crediteducation/WhatsInYourScore.aspx

Step 4

DO NOT close your accounts.  It sounds counter intuitive, but this ties into Step 3.  When you close an account you now have less available credit.  When 30% of your score hinges on the amount of credit you have available and the max score is 850, doesn’t take a genius to figure out closing accounts can actually lower your score.

Step 5

Use bill pay or automatic payments.  Most banks have some service allowing for payment of bills in a timely manner.  FICO weighs timely payments as 35% of your score.  If you live an active lifestyle like most Americans, using automatic payment methods is a convenient way to insure timeliness. 

Helpful hints:  A late payment with your credit card doesn’t have to affect your score.  When reporting payments, lenders report for varying monthly periods, i.e.…30 days, 60 days, etc.  So you may have to pay a fee to the credit card company for your late payment, but if it’s not more than 30 days late, it WILL NOT be reported as late to the credit bureaus. 

Step 6

Minimum payments:  If you keep a balance on your credit cards, like most of us, make an effort to pay more than the minimum amount due.  The reason is three-fold.  First, by making only minimum payments, it will take your much longer to pay off your balance.  Second, you will accrue more interest and the compounding effect of revolving debt interest will make it extremely challenging, depending on the balances you carry, you may end up simply paying on the interest of your balance and NOT the balance.  Third and most importantly, refer to Step 3.  The higher your balance, the lower your available credit, so keep those balances as low as possible.  

Helpful Hint:  Call each of your credit card companies and ask them to raise your credit limit.  This one simple step will increase your available credit and raise your score virtually overnight.