- Bargaineering - http://www.bargaineering.com/articles -

Quick Ways to Improve Your Credit Score

Like your weight, your credit score [3] isn’t something that you can safely change overnight. It takes months and years of responsible credit usage, regular payments, and living within your means. If you were fortunate to avoid credit card debt in your youth, chances are your road to recovery will be easier than someone who has been tripped up by all the tricks and gimmicks of the credit and debt industry. If you’re one of the many who avoided credit and now have no history to speak of, your road to recovery will be different, but not necessarily easier.

All that said, there are a few ways you can give your credit score a quick shot in the arm. These tips won’t boost your score overnight and they will not increase your score by much. If you’re planning on buying a something with credit in the next few months, it behooves you to take some of these steps if you can.

Pay Off Debt

The biggest factor you can have an immediate impact on is credit utilization [4]. Credit utilization is a percentage figure that divides your current debt by your credit line. Current debt is calculated by adding up all the statement balances on your credit report, as reported by the credit card companies. If you have $10,000 in credit available and you use $1,000 – that’s a utilization of 10%. It doesn’t matter of you carry a balance on your cards or if you pay it off in full each month, the same number is reported.

If you don’t have any outstanding debt, consider paying off your balances before the close of the month or charging less. Experts claim that the ideal credit utilization is less than 10% but no one knows for sure. Keep it under 10-15% and you’ll be fine.

Check For & Dispute Errors

You’re reviewing your credit report every year right? If you haven’t been (I’ll be honest, I haven’t checked on a regular basis either… there are a lot of other things to do!), it’s time to take a look because there might be a problem on your report. In year’s past I’ve found listed accounts that weren’t mine, an address I never lived at, and a social security number that clearly wasn’t mine (the report had two, mine and some other bozo’s number). If you have an error on your account, dispute it no matter what. Even if it has a sterling payment history, dispute it because it’s not yours.

If you’re lucky (or unlucky as the case may be) to find an erroneous account dragging down your score, getting it removed can boost your score a lot. One friend disputed an error and he said it boosted his score over fifty points, not uncommon when you consider a collections listing can kill a score.

Request a Credit Limit Increase

Some cards will give you a credit limit increase without pulling your score. I have done this several times with Citi, where requesting a credit limit increase [5] can take just a few seconds. It’s crucial that you make sure that the request doesn’t come with a credit pull because an inquiry will damage your score. You want to increase your limit so your utilization goes down but it’s not worth an inquiry. If you have to put in a number request and the credit card company asks you for information needed to pull your report, stop.

Don’t Use a Credit Score Service

Finally, whatever you do, don’t use a service that promises to boost your score. What most of them do is write a letter disputing everything potentially negative on your credit report. While this may be a good tactic, as some companies no longer exist or no longer have the records to back up something on your report, you can do this yourself if you are OK with it. I personally think that disputing old potentially negative records is a good strategy but some people might have qualms against it.

(Photo: dahlstroms [6])