How to Build Credit if You Have a Poor FICO

When you apply for a mortgage, a car loan or other credit, the lender looks at your FICO score, which is a numerical assessment of your credit risk compiled using programs developed by Fair Isaac and Company. Your FICO score can range from 300 to 850; the higher it is, the better rate you will get on a loan. If it is too low, you will pay more for your loan. And if it is too low, you won't get a loan at all. If your FICO score is low, there are several things you can do to improve it.

Instructions

1

Get a free copy of your credit report from AnnualCreditReport.com. You need to provide the service with your full legal name, date of birth, Social Security number and credit card information to verify your identity.

2

Read your credit report. If there are any errors, report them immediately to the credit bureaus by using the "Contact Us" link on AnnualCreditReport.com website. List the account that is in error and why you think it is in error.

3

Follow up. By law, you must receive an answer to your inquiry within 30 days of your email. If the error was not removed, contact the original credit lender to see why the error was reported. Keep a record of all contacts and a copy of any written correspondence.

4

Pay your bills on time. Making on-time payments is one of the most important ways you can improve your FICO score. If necessary, call your creditors and work out a payment plan to become up to date on all payments.

5

Pay off all collections, liens, judgments and bankruptcies in full. These will stay on your credit report for seven to 10 years, but they will have a less-negative impact on your score if they are listed as paid in full.

6

Pay down all credit cards to less than 30 percent of the credit limit. This can quickly raise your credit score.