How to Fix My Credit Score Now

Improving your credit score by yourself.

A good credit score is required for securing a loan, a credit card or even a job. Your credit score is known as your FICO score. It is named after Fair Isaac and Company (changed to Fair Isaac Corporation in 2004), who created the current credit rating system. Factors contributing to your credit score include payment history, amounts owed, length of credit history, new credit accounts and types of credit used. Credit scores range from 300 to 850, with an average score of 723. The higher your score is, the better. You can fix your credit score over time for free by focusing on a few different areas.

Things You'll Need

• Credit report

Instructions

1. Get copies of your credit report from each of the three major reporting agencies: Experian, Equifax and TransUnion. Once a year, you can request free copies of these reports at annualcreditreport.com or by calling 1-877-322-8228.

2. Check your reports for errors. Look for reported past-due payments that you know you made on time and accounts you don't recall opening. Report errors to the reporting agency. Identity theft is one of the fastest growing crimes in the United States. If an identity thief is using your information, this could lower your credit score.

3. Make your payments on time. Payment history accounts for 35 percent of your credit score according to FICO's score calculator.

4. Pay down credit card balances. Amounts you owe account for 30 percent of your credit score according to FICO's score calculator. Paying down credit cards affects your score more than paying off installment loans such as mortgages, student loans or car loans. In an article on MSN Money, journalist Liz Pulliam Weston recommends trying to get your balance below 30 percent of the credit limit on the card. The lower your debt-to-income ratio, the more beneficial it is to your credit score.

5. Keep older accounts open. According to FICO's score calculator, the length of your credit history accounts for 15 percent of your credit score. If you have opened a number of recent accounts, you can close those, but keep your oldest accounts open to show a longer credit history. If you close a credit card you opened 15 years ago and your next newest card was opened six years ago, your credit history is shortened to six years rather than 15. If possible, have a relative with a good credit history add you to one of their accounts that they have had open for a while. Adding your name extends your credit history as far back as when the person opened the account.

6. Set up a budget that makes working on your credit score a priority. You won't fix your score overnight, but reducing your debt, improving your payment history and extending your credit history will eventually raise your credit score.

7. Consider consulting a credit counseling organization. Many of these organizations are non-profit and will work with you to raise your credit score. Ask your local bank, friends or family for recommendations on which organization to use.

Tips & Warnings

• Once you raise your credit score to 700, any changes you make to your credit report will have less effect on your score.

• The Federal Trade Commission says most companies that advertise quick credit fixes are scams.

References

• MSNBC: How can I raise my credit score?
• MSN Money: 7 fast fixes for your credit scores
• Federal Trade Commission: Credit Repair, How to Help Yourself
• Consumer Credit Help: How Do I Fix My Credit Score as Quickly as Possible?
• Federal Trade Commission: About Identity Theft

Resources

• myFICO: Credit Education Center, What's in Your FICO Score?