How To Improve Your Credit Score

A common concern among people writing to ConsumerAffairs.com is their credit score. They often worry how some action will affect their credit.

"We were in financial hardship and were needing to short sell our condo," Nicolette, of Saratoga Springs, Utah, told ConsumerAffairs.com. "We were told by CitiMortgage that we needed to be at least 60 days late on our mortgage payments in order to qualify for a short sell. We had excellent credit scores, and had never missed a payment on anything in our lives. But, in order to qualify for the short sale we stopped making payments and were 90 days late by the time the sale closed. Because of this misinformation, our credit scores have been ruined."

Once your credit score has been damaged, is there any way to restore it? Fortunately, there is.

Arm yourself with information

For starters, pull your credit reports using www.annualcreditreport.com. That's the free government-mandated service, and it does not require you to sign up for any kind of credit monitoring service. It's available free to all U.S. residents once a year.

Once you have your credit report, check it for errors. Your credit report contains the data used to calculate your score and it may contain errors. In particular, check to make sure that there are no late payments incorrectly listed for any of your accounts and that the amounts owed for each of your open accounts is correct. If you find errors on any of your reports, dispute them with the credit bureau and reporting agency.

Next, set up payment reminders for all of your monthly bills. Making your credit payments on time is one of the biggest contributing factors to your credit score.

Banks often offer payment reminders through their online banking systems that can send you an email or text message reminding you when a payment is due. You can also set up automated payments from your account to you don't have to remember to pay he bill.

Easier said than done

Try to reduce the amount of the money you owe. This might seem difficult, but reducing the amount of credit card debt you owe is going to give you the biggest bang for the buck.

Put away your credit cards until you've paid down your balance. If you have an asset that you can sell for cash, do it and apply the money to your debt. Come up with a payment plan that puts most of your available budget for debt payments towards the highest interest cards first, while maintaining minimum payments on your other accounts.

Be very selective about opening new credit accounts. Be wary of arguments that having another credit card will help improve your credit score. If you already have existing debt, it probably won't. And the kinds of credit cards that are marketed to people with poor credit often have low credit limits and very high fees. You could easily end up with an even lower credit score.

There's really no quick, easy way to repair your credit. If a company promises that there is, avoid them like the plague.