If you take the following steps you are “guaranteed” to see your credit score improve over the next 12 months:

1. Think before you buy. If purchasing something on credit will take you two years to pay off, “it’s not worth it.”

2. Don’t max out your credit cards. This goes back to the “30%” of your credit score that depends on the ratio between credit used/credit available. The smaller the percentage, the better your score.

3. Pay your bills on time. According to FICO, if your credit rating is an excellent 780 and you are 30 days late in making a payment, it can shave as much as 110 points off your score. If the same mistake were made by someone with a credit score of 680, it would only knock 60 to 80 points off.

4. Do not apply for new credit cards. Every time you do the issuer runs a credit check.  Each inquiry shaves points off your score.

5. Don’t forget about old credit cards and use every card at least once a year.  Pay the amount you charge in full (and on time) or the issuer might close your account due to inactivity.  That would hurt your credit used/credit available ratio.

6. Check your credit report at least once a year to make sure the information is up-to-date and accurate.  Unfortunately, a Western Union survey conducted earlier this year found that 1 in 4 consumers have never checked their credit score.

Under federal law, you are entitled to one free report every 12 months from each of the three credit-reporting agencies. Don’t get sucked in by many for-profit web sites that want to charge you for monitoring and other services.

 Instead, every four months, check your credit score at a different credit agency. If something negative hits your account, you’ll find out about it because it will likely be picked up by all three.

According to the Federal Trade Commission, “There is only one authorized source for a truly free credit report:” www.AnnualCreditReport.com.

7. Knowledge is power.  Understand what factors make up your credit score and how your behavior impacts it. The two most important things you can do are

  1. pay on time,
  2. avoid maxing out your accounts and show a pattern of reducing the balances outstanding.

If you need me to go over your credit report and help you with analyzing it please call me direct (208) 461-9443.