How to Improve Credit Score in One Year

Most information and accounts stay on a credit report for more than five years. Even closed accounts will appear on a credit report for years. Although an individual may have improved his financial standing with a higher salary, it is still difficult to get good interest rates with a low score. A credit score cannot magically be fixed in one year, but by being proactive you can reverse the damage.

Instructions

1

Get a copy of your credit report and score from each of the three leading companies. Look it over for any mistakes such as accounts you do not have or balances you have had paid off for a long time. If there are any mistakes call the company misreporting your score frequently until it fixes the issue.

2

First, pay off any credit card debt as soon as possible. Then attack any vehicle or other loans. Pay off the debt with the highest interest rates first, but do not neglect payments on your other debt. From this point on you cannot afford to miss a single payment.

3

Pay your bills early or on time. Do not allow yourself to be late on a single bill, whether rent, utilities or credit cards and loans. Your score will continue to lower for each late or missed payment. Paying every bill early sets up a pattern which factors into your score.

4

Once your credit cards are paid off, do not close the accounts. Cut up the cards if you are afraid you will use them. Leaving the accounts open with available credit but a zero balance raises your available credit ratio.

5

Do not open any new credit lines whether store cards, major credit cards or local financing. Each of these lowers your score from the initial credit check as well as showing more accounts. Too many accounts lowers your score.

6

Visit a local lender to remove a small amount of money. To use this technique you must be very responsible. Borrow two or three thousand dollars for home repair or something similar. Keep the money in a separate account and do not spend it on anything. Set up a direct deposit from the new account to pay the bill. Pay it off early to save money on interest, but make sure you show a record of consistent bills paid on time.

7

If you are applying for a home loan, use additional resources to supplement your credit score. Having a six-month buffer of living expenses saved in the bank can save you 1 percent on your mortgage interest rate. Being able to show a letter from a landlord showing timely rent payments may also be considered. A lender may allow these things to grant a loan if your score is still not high enough to qualify.