Tips on Boosting a Credit Score

Your credit score is determined by proprietary formulas developed by the FICO scoring company and the credit bureaus. The My FICO website explains that certain factors affect the calculation. Boost your score by concentrating on the most heavily weighed factors. Your credit reports, from which scoring information is obtained, will reflect your efforts.

Pay Bills on Time

Your payment history on your credit reports shows whether you pay bills by the due dates and any delinquency period when you are late. The My FICO site advises that 35 percent of your credit score results from this information. Budget to ensure you have enough money for at least the minimum payment on all of your accounts. Set up electronic payments, if possible, so the funds always arrive on or before the due date. Otherwise, mail them early.

Reduce Debt

Your debt load is the second most important factor in your FICO score, according to My FICO. It makes up 30 percent of the score. Lenders like to see you actively using credit, but they will not open new accounts if you owe too much to existing creditors. Your balances do not go down much if you only pay the bare minimums. Cut out optional purchases and expenses and redistribute the money to your highest interest accounts. The federal Credit CARD Act makes credit card companies spell out how long it would take you to pay off your accounts by only paying the minimums, according to the Board of Governors of the Federal Reserve System website. Use this information as a guide for where to channel the extra funds for the most impact.

Maintain Old Accounts

Keep your oldest credit card accounts open and in good standing. Fifteen percent of your credit score results from how long you have used credit. Closing old accounts hurts this area. Leave them open and use them occasionally so your bank does not cancel them for inactivity. The law forbids card issuers to charge inactivity fees, but they can close accounts for non-use.

Maintain Accurate Reports

Credit scorers depend on the information on your credit reports for their calculations. Wrong information affects your score and negative entries lower it. The Federal Trade Commission explains that you can legally dispute mistakes, which forces the credit bureaus to verify or delete the data. Get no-cost credit reports from Annualcreditreport.com and review them for accuracy. Report mistakes through the online dispute forms on the bureau website. Your credit score gets a boost once the bureau fixes or removes the incorrect, negative entries.