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Improving Your Credit
By Kathy Johnson
California Mortgage Rate Columnist
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You'd like to buy a home, but your credit score could be better? Here are some ways to raise your credit score.
Step 1: Check Your Credit Report
First, make sure your credit report is correct, since your credit score is calculated using information from your credit report. Request a free copy from one or all of the three major credit bureaus by calling the centralized agency they've set up for this purpose at 1-877-322-8228 (toll free) or logging on to www.annualcreditreport.com.
Step 2: Correct Errors
Once you receive your report, read it carefully to make sure there are no errors affecting your credit (accounts listed that are not yours or a negative entry that is incorrect, for example). Correct errors by either completing the dispute form provided or writing a letter noting each mistake and documenting why it is wrong. Make sure you keep copies of everything you send to the credit bureaus.
Step 3: Paying Bills & Managing Accounts
Once you have a clear picture of your credit status, improve your credit score by paying off any accounts in collection, and paying down balances on your credit cards, starting with those with the highest interest rates.
You may also want to close unnecessary accounts, but use caution here. Closing accounts can adversely affect your credit score by raising your utilization ratio - the amount of debt you have versus the amount of credit available to you. You will want to make sure your oldest accounts stay open in order to show a longer credit history.
Of course, the single most important thing you can do to improve your credit score is to pay your bills on time, every time. If you do this while continuing to use credit responsibly, your credit score will have no place to go but up.
About the Author
Kathy A. Johnson is a freelance writer and editor based in Florida. She has worked as a writer and editor for several publications, writing articles on health and fitness, gardening, teen issues and other topics. She is currently the features editor of Forum, a bimonthly publication of the national mothers group, Mothers & More.
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