Raise your so-called FICO score

There are a number of things you can do to try to raise your so-called FICO score. In general, you’ll pay higher interest rates the lower your score. FICO scores range from 300 to 850; the median score is 723. To get the best rates, you’ll usually have to have a score of at least low- to mid-700s.

1Make sure the information used to calculate your credit score is correct and up-to-date. You need to get copies from each credit agency. You can get one free every year by visiting AnnualCreditReport.com. This is a site set up under a federal law requiring the credit agencies who collect all this information on you to give you access to a free copy of your reports once a year.

2Once you get your report, look it over carefully. Especially check if you have due payments which you actually made on time (and you can prove it). Or maybe there are accounts still listed that have been closed? The worst case scenario: someone else’s account or address may be listed under your name. This last bit is one reason to check your report: to see if identity thieves have been opening accounts in your name. If you find any mistakes, write to the reporting agency and ask to have the information corrected. You should get a response within a few weeks; if not, give them a call.

3The simplest thing you can do to raise your credit score is to pay your bills on time. More than third of your score is based on your payment history.

4The next big chunk is based on how much you owe. Moving money from one account to another won’t help, you need to reduce overall loan balance.

5 Another 15% of the score is based on length of credit history and that’s hard to speed up. You see, lenders want to see a good track record of your payments. That’s how closing your old accounts may reduce your score by shortening the average length of your credit history. To avoid this from happening, stick with one or two accounts and gradually add more. If you have no credit history, you may want to start with a secured loan or credit card. By keeping money in a savings account with the same lender — and using it to back your loan — you’ll lower the risk to the lender, get a better rate and start building a good payment history.

6Also, opening up a lot of accounts at once can also hurt your score, even if you pay your bill at time. You may also hurt your score if you’re constantly changing cards and chasing a lower rate.

7Increase your credit card limit. Also, when talking to a credit card company rep, make sure you ask if they can do an increase without doing a “hard pull” on your credit report. A “hard pull” shows up on your report as an inquiry for credit, and can result in a quick 10+ point drop in your score.

8Obtain a new credit quickly, which means when you apply for a credit card, an inquiry is placed on your report, but multiple inquiries within a day will only count as one inquiry. Score-wise you’ll win, if you, for example, apply for multiple credit cards at the same time.

9Monitor your score! Once you’ve finally gotten good score, monitoring services is another level of insurance to protect your score from sinking.

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