How to Raise Your Credit Score by 100 Points

Credit markets have tightened considerably with the nuclear meltdown of our financial markets. What cash is still available for borrowing will be harder than ever to obtain. Your credit score will definitely affect whether or not you get the loan you need, or at the very least will affect the interest rate you'll get. Plan ahead. Begin working now on credit repair. The process can take a few months.

Things You'll Need

• Phone
• Internet
• Credit report

Instructions

1. 

   Know your credit score and what the negatives are. Shoot for a score above 700. If your score is above 700 you probably don't need to invest a lot of time and money to get your score higher. Check with your lender though. The changing financial landscape may have affected this long-standing rule of thumb.

2. Contact the credit reporting agency (Transunion, Experian, or Equifax) about any obvious errors. The Federal Trade Commission suggests contact the agency in writing. Explain what you think the error is, and include copies (not originals) of documentation that would support your position. The agency is required to look into your claim. The agency must report their results to you in writing. If their investigation results in a change to your credit report, they must also provide a free copy of your revised credit report.

3. Find a reputable credit repair company. Certainly there are bad companies that charge hundreds or even thousands of dollars that produce little or no results. But there are reputable credit repair companies. I was referred to Lexington Law by my mortgage broker. Lexington Law was around $59 per month, and an additional $13/mo for Identity Guard, a service which makes available your credit report from all three reporting agencies. With their help my score went up more than 100 points in about six months. You can try to go it on your own, but the working with a credit repair company will keep you disciplined about your credit repair efforts. In addition, a good credit repair company just might have more clout with the companies who have dinged your credit than you will.

4. Keep your nose clean. There is no sense in putting a lot of effort into credit repair unless you're willing (and able) to change the practices that got you there. A) Pay your bills on time, maybe by using your banks automatic bill pay that you manage over the Internet. B) Use under 50 % of your credit line on each account. Creditors want to know that you won't be tapping out your borrowing power anytime soon. C) Minimize the number of people checking your credit. A lot of hits by companies checking your credit could indicate that you're planning on opening a number of accounts.

Tips & Warnings

• Try setting up monthly automatic payments through your bank's online bill payment feature.

• Get a free credit report.

• Don't close any accounts during this process. Your overall borrowing capability is an important factor in determining your credit score.

Resources

• Pitfalls of Lowering Credit Card Rates
• Use Online Banking Effectively