Five Ways to Improve Your Credit Score Today

August 4, 2007 By Matthew Paulson

A lot of financially savvy Americans keep a very close eye on their credit score, some of them to the point of obsession. There are individuals who sign up for services that will tell them how their credit score changes from month to month. There’s a lot of over emphasis on one’s credit score, but it does make decent sense to have a general idea of what your credit score is, especially if you’re going to make a major purchase anytime soon.

If you plan on buying a house, maybe a boat or a new vehicle in the next few months, you might want to take some steps to improve your credit score before going in for a loan. This will help you get a better interest rate and more favorable terms on your loan.

Here are five different ways to improve your credit score in the immediate future:

1. Pay off Debt – 30% of the your credit score is calculated by the amount of debt that you have. If you put in some effort and reduce the amount of debt that you have, your debt utilization percentage will go down and your credit score will improve.

2. Get and Stay Current – If you’re late on any of your bills or have any blemishes on your credit report, take care of them before you go into get any sort of loan. Any negatives on your credit report will dramatically affect your credit score. Get all of your payments to be current, and make sure you keep being current to improve your credit score.

3. Check for any inaccuracies – A shocking percentage of credit reports have inaccurate information on them. Someone else’s loan might end up on your credit report, the company you’re doing business may not have reported your payments accurately, the status of the loan could be incorrect, you name it. Pull a copy of all three of your credit reports and make sure that everything on there is accurate before going in for a loan. If there’s anything wrong, report it to the bureau and get it corrected immediately.

4. Don’t Sign Up for New Credit – Signing up for new credit cards, credit lines, and other debts will lower your credit score in the short term. You definitely do not want to go out and apply for a bunch of credit cards before going into buying a new house. This is making the credit bureau think that it’s possible you’re going to go out and get a bunch of debt soon after you sign up for them, whether it’s true or not.

5. Keep Unused Accounts Open – If you have a credit card or a credit line that’s has a zero balance and is just sitting around, don’t close it. It’s very likely that the 0 balance is improving your credit score because it’s lowering your debt utilization ratio. You’ll want to check on the cards every couple of months to make sure there’s no charges on them, but it’s definitely worth keeping them open.

If you’ve got a bad credit score, you’re not stuck with it. You can improve it over time by taking a few positive steps in your financial life.

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