Paying off past-due collection accounts is a step in the right direction when trying to improve your credit rating and your financial situation. Having accounts in collections can damage your credit score. Once the accounts are paid off, you can take several steps to increase your credit scores again.
Make Regular Payments
One of the most effective ways for increasing your credit score is to make regular, on-time payments. Do this on all of your accounts, including utility bills, mortgages, car loans and credit cards. According to My FICO, 35 percent of your credit score is impacted by your payment history. This means that if you can develop a positive payment history, it will have a drastic effect on your credit score overall. Lenders will see your payment history when you apply for credit.
Look for Errors
When you want to increase your credit score, get a copy of the document from the three major credit bureaus, Experian, Equifax and TransUnion. Then look over your reports for any errors. For example, if you see an account on your profile that you do not actually have, this is a mistake which could be removed and boost your score.
Get a Credit Mix
Another way to enhance your credit score after paying off collections is to get a mix of credit. Having a mix of credit types makes you a more attractive borrower to lenders. For example, if you have a mortgage, a car loan, credit cards and store accounts, this looks better than if you only have one type of credit. When you balance multiple types of credit effectively, it shows that you know how to handle your money.
Use Credit Sparingly
When trying to boost your credit score, use your credit sparingly. This means that you should not go out and rack up large credit card balances. Try to keep your credit balances below 30 percent of their available limit. Try to pay off your balances when they are due instead of allowing them to grow.
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