Improving your credit score means learning use credit wisely.
Lenders use your credit score to assess your ability to repay your debts. If you have serious delinquencies, a bankruptcy or a foreclosure on your credit report, it becomes more difficult to get approved for new loans or lines of credit. Debtors seeking to rebuild bad credit can turn to a credit repair company for help. But with a little planning, it's possible to successfully repair poor credit on your own.
Instructions
1. Obtain copies of your credit report from each of the three major credit reporting bureaus. You can get one free credit report per year from Equifax, Experian and TransUnion by visiting www.AnnualCreditReport.com. If you've been denied credit, you can also get a free copy of your report by sending a written request to the credit reporting bureau that reviewed your application.
2. Carefully review each of your credit reports for errors or incorrect information. The Fair Credit Reporting Act (FCRA) protects your right to dispute information on your credit report that you believe is inaccurate. You must send a written notice to the credit bureau specifying the information you want to dispute and your reasons for doing so. The credit bureau then has 30 days to investigate your claim and either remove the incorrect information or send you a letter explaining why they believe it's accurate.
3. Develop a budget and create a system for paying your bills each month. According to myFICO, 35% of your credit score is based on your payment history. Having multiple late or missed payments on your credit report will continue to drag your score down. Take advantage of automatic bill payment services or electronic payment reminders if your bank offers them to ensure that your bills are paid on time.
4. Pay down your debts and limit your applications for new credit. Another 30% of your FICO credit score is determined by the amount of debt you have. If you have multiple credit cards, loans or lines of credit that are close to or at their limit, then you need to develop a plan for aggressively paying them down. While you're decreasing your debt, you should only apply for new credit when it's absolutely necessary since excessive inquiries from lenders can cause your score to drop.
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