how can you make your credit score better?

Question

last year i paid most of my outstanding bills on my credit report and this year i applied and got 2 credit cards hoping to bump up my score. then i got my credit score and its 549!! that is horrible! what can i do to make it better?? i know i still have some outstanding bills on my credit report but they are really old and someone said not to pay them because it can actually make your score go down. help please...

Answer 1

First of all, if your bills were already showing up on your credit report, they were most likely past-due, in collections, or not paid as agreed. Paying them is a good thing, but once they've hit your credit, the damage is pretty much done.

Secondly....the 2 credit cards that you applied for.....did you need them? Everytime you apply for credit, whether it be a credit card, department store card, etc., that shows up as an inquiry on your credit report. Too many inquiries can be considered a "negative" mark on your credit, with the exception of shopping for a mortgage, and there's a bit of a grey line there.

Paying your outstanding credit will not make your credit go down....it might not make it go up either....but a paid bill looks better to a creditor than one that hasn't been paid. Regardless, if it's your debt, than you are obligated to pay it.

Between the two credit cards you currently have, I would pay off the one with the highest interest rate (or transfer the balance to the other card, if you can), and then close it. Then, I would pay off the balance on the other one (if you can), and use it for EMERGENCY PURPOSES ONLY. Set up an autopayment for the minimum on that card.....that way, even if you have a balance, you'll never have a late payment on that card because you'll be making a payment on time, every month. Be sure to know what the minimum is (it can change) so you can expect that amount to be deducted from your bank account each month. You might gain a few points just from paying off one balance...even if you close the card. Your credit score isn't just based on the number of late or non-payments you have. It's also based on the number of open accounts you have, the balances on those accounts, and your available credit.

After you've closed one of the credit card accounts, you need to sit down and work out a budget. You need to "see" where your money goes every month. If your goal is to raise your credit score, you need to find the money to pay off all of your outstanding bills while staying away from the temptation to open ANY new line of credit.

If you really want to improve your credit score, you are going to have to make some changes in how you spend your money. If that means getting basic cable instead of the deluxe package, going out every other weekend instead of a few times a week, or shopping every few months instead of once a month? Those are the things you need to take into consideration. It's going to take a lot of work, effort and sacrifice on your part.....but take it from me.....my credit score was worse than yours before I sat down and got serious about paying my debts, and then, paying my bills, in full, every month...all year long. It took me about 3 years...but now I have a 725 high score, and am close to completeing the pre-approval process for a new home construction loan.

Grab a copy of your most recent credit reports from all three bureaus...and go over them with a fine tooth comb. If you find any discrepancies, dispute them with the bureaus asap. Do not dispute them online.....right letters, and mail them certified with a return receipt request, and keep track of the letters sent vs. what you receive from the burueas. You'd be surprised at the affect that one or two deletions of information on your report can have on your overall scores.

I went through this company http://www.mncredit.com/credit/contact.html to help me in the letter writing. You can write the letters yourself, and there is a lot of info on the web to help you in that....but I didn't always have the time for that...so I made an investment in getting someone to help me....and it was WELL worth it.

Stop spending money, pay your bills, and remember to save some in between. Trust me, all your hard work now will REALLY pay off in the end.

Hope this helps!

Answer 2

To make your FICO score better, always pay on time....it's even better to pay ahead of time and pay more than the amount due if you can.

Applying for credit, either cards or furniture or whatever, will cause your FICO score to go down somewhat....but only temporarily.

As for old outstanding bills, I would say it's better to pay them off than have them lingering on your credit report. Who ever told you to forget about paying them gave you some bad, bad advice.

Call the creditors and work out a payment plan with them as soon as possible.
Best to you.

Answer 3

Are you carrying balances on those credit cards? Balances of more than 30% of your limit hurts your score. Pay off the credit card balances.

You have to have at least 2 years of consistent, on time payment history before you'll see much improvement. Just keep paying on time.

Answer 4

to raise credit score

1. Always pay on time or ahead of time.
2. maintain low balances on credit cards
3.To boost your score: Don't charge anything for at least 60 days before applying for a loan
4. keep your total potential debt to earnings load low - If you have a card with a $15000 credit line, you may ask them to reduce it to something more realistic, like $5000.
5. You should have a recent history of both installment or term (Car or house loans) and revolving credit.
6.To boost your score: Don't close unused accounts when you transfer debt.
7.To boost your score: Consider opening another credit-card account or two, or taking out a car loan or small bank loan.

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