How to Boost Your Credit Score in a Bad Economy

Raising your credit score will increase your borrowing power, give you access to lower interest rates, and give you financial security. Learn how to improve your credit score.

Difficulty: Moderately Easy

Instructions

1. Know what your credit score is. You can request a free credit report at annualcreditreport.com.

2. Review your credit report and look for errors. Make sure everything listed on the report is yours. Sometimes, another family member's items will show up on your report. If you find errors, report them to the credit bureau and have them corrected. You don't want to be penalized for something that isn't even yours. (Download a free form to use for disputing an item on your credit report here: http://www.oskie.com/credit-dispute.htm)

3. Always pay bills on time. If possible, automate bills online to prevent any late or missed payments. Most banks now offer online banking and billpay is a free option.

4. Avoid opening any new accounts. If you are shopping for rates for a mortgage or vehicle loan, do it within a 2 week period. Too many requests for credit may cause your credit score to drop.

5. Pay off debt rather than just moving it around. (Sort of like rearranging the deck chairs on the Titanic - just moving things around doesn't accomplish anything.) Cut up or destroy cards to prevent them from being used. Make a conscious effort not to use credit cards.

6. Negotiate for a lower rate. Call your credit card companies to see if you can get a lower rate - some will work with you - but you won't know until you ask.

7. Consolidate debts. Review your credit card, installment loan, and home equity line of credit balances and see if you can consolidate any of them.

8. Don't let old credit cards go into dormant status. Use your credit card at least once every 12 months, even if it is just to charge a cup of coffee or a magazine. No activity on a credit card can lower your score.

9. Keep balances on credit cards below 50% of your credit limit.

10. Consider meeting with a credit counselor. This in and of itself won't raise your credit score, but a professional may be able to help you manage your debts better than you can on your own.

Tips & Warnings

• Give yourself time to improve your credit score. It won't happen overnight but keep trying and you will eventually see results.

[WindyGale]

on 12/15/2008 Informative.