6 Ways to Boost Your Credit Score

Lenders have recently tightened up their standards for everything from credit cards to home loans. For the most part, qualifying for credit comes down to your credit score, a three-digit number that rates how likely you are to make your payments on time and in full. A score below 620 can make it harder – and more expensive to get loans, while a score above 800 often means first-class treatment from lenders. Although credit scores are increasingly a source of concern for many consumers, they aren't like height or eye color. There's a lot you can do to change yours. It just takes time and focus. Here are six ways to boost this important number:

1. Pay your bills on time. Any late payments eat away at your score. And missing payments on all of your bills for even a single month can make your credit score tumble dramatically. If you procrastinate, are too busy or have a hard time remembering due dates, consider automatic bill payment through your bank.

2. Reduce debt. Lenders consider how much you already owe when approving or rejecting your application for more credit. Pay down what you can't pay off.

3. Keep your lines open. It may seem to fly in the face of common sense, but you shouldn't cancel your current credit cards. Your credit rating is partly determined by comparing how much you've actually borrowed to how much you're approved to borrow. If you have credit cards with high limits and low balances, you can chop up the plastic if you wish, but don't close the account. It shows lenders that you're a responsible user of the credit you already have.

4. Avoid bankruptcy. It can stay on your credit report for up to a decade. If you can, keep paying your bills, even if it means macaroni and cheese four nights a week, disconnecting the cable and taking a second job.

5. Get sound advice. Consider credit counseling from a nonprofit consumer credit agency. They may even be able to help by negotiating a debt-repayment plan with lower interest rates. However, you should avoid for-profit debt-settlement firms, which can disappear suddenly, leaving your credit score worse than it was to begin with.

6. Know your score. Under the Fair Credit Reporting Act (FCRA), you are entitled to a free credit report every year from each of the three national credit-reporting bureaus – TransUnion, Equifax and Experian. If you're ever denied credit, you are also entitled to a free credit report from the agency whose report was used to deny you credit. If your credit report contains inaccuracies, you can appeal to the agency to correct it.

For your free credit report, visit annualcreditreport.com, or call 1-877-322-8228. If you'd rather mail your request, fill out the Annual Credit Report Request Form and send it to:

Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281

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