Can You Improve Your Credit Score?

Yes, but be patient—unfavorable information cannot just be deleted. The data that go into your credit score can be divided into five categories.

• Payment history: This is the most crucial component of your credit. Make your loan, utility and other bill payments on time. Pay down large loan balances with more than just the minimum payment allowed. Just one late payment can take a year of on-time payments to fix.
• Amounts owed: Keep your total debt to available credit ratio below 50%. For credit cards, FICO bases this ratio on the total unsecured debt and the total available credit, so closing unused credit cards could actually hurt your score. If you must carry a large card debt, it’s better to spread the debt between three or four different cards than have it all piled on one.
• Length of credit history: Sticking with one credit card for many years looks better than several relatively new cards.
• New credit: Don’t be lured by new cards with zero transfer balance offers, or the promise of a free coffee mug. A high number of recently opened accounts, and recent credit inquiries, can lower a score.
• Types of credit used: Not all credit is created equal. Accounts with higher risk establishments such as finance companies or payday loan stores are suspect. A primary mortgage carries more weight than a gas card.

While bad information cannot be removed from your credit report, erroneously reported information can be deleted if you catch and report it. A lender has 30 days to respond to a request for clarification, or the item is expunged.

The FACT Act provides everyone with a free credit report from all three credit bureaus once each year. Click on www.annualcreditreport.com to learn more.