Your credit score affects your ability to qualify for loans, insurance, apartment leases and in some cases, employment. Factors such as your payment history, how long you've had credit and your credit balances contribute to your credit rating. Although you can't legally remove accurate negative information from your credit report, you can take other steps to improve your credit rating.
Free Credit Report
Before you can improve your credit score, you need to know exactly what's on your credit report. If you have a credit history, three credit reporting companies maintain a credit file on you. You're entitled to one free credit report from each of the three agencies once every 12 months. You can order all three reports at the same time or stagger them throughout the year. To receive a free copy of your credit report, visit annualcreditreport.com or call 877-322-8228. You're also entitled to obtain your credit score from any of the three credit agencies, for a fee.
Credit Factors
Negative information on your credit report that impacts your credit rating may include late payments, judgments or liens against you, bankruptcy and maxed out credit cards. Other factors potentially contributing to a low score may include a short credit history, multiple credit applications and the number of open credit accounts in your name. Records of late payments stay on your credit report for seven years, while bankruptcy can remain on your report for 10 years. Unpaid judgments appear on your credit report seven years or longer, depending on the statute of limitations, according to the Federal Trade Commission. The statute of limitations for judgments varies by state, with some states allowing unpaid domestic judgments to be renewed indefinitely.
Correcting Inaccuracies
When you receive your credit report, check for any inaccuracies that could affect your credit. If you find errors, notify the credit reporting agency in writing of your dispute, providing details about the inaccuracy, including the account number and why you think it's incorrect. Notify the creditor that provided the information in question, noting your dispute with the negative report. If an investigation finds the information to be inaccurate, the credit reporting agency will remove it from your file. If the dispute goes unresolved, the FTC advises that you can request your dispute to be noted in your credit file.
Credit Repair
Make timely payments starting today. Start paying down outstanding credit card debt. Even if you pay creditors on time, your credit score is affected by how much of your available credit you're using. As your outstanding balances go down, your credit score will improve because your debt accounts for 30 percent of your score. Refrain from applying for new credit while you're trying to improve your credit score because multiple loan inquiries can negatively affect your credit rating. Your payment history accounts for 35 percent of your credit score, so late payments will negatively affect your score for seven years. However, if you start paying your bills on time, your credit score will improve because items that are currently past due weigh more heavily on your score. You'll see an improvement in your credit rating in as little as six months if you continue to make timely payments and pay down debt.
Paying Down Order
Consumer Reports says that paying off your smallest credit balances first can help you improve your credit score by increasing the number of open accounts with a zero balance. This approach calls for you to make minimum payments on all your credit accounts except the one with the least balance. Pay as much over the minimum as you can afford until you have the smallest debt paid off, then move on to pay down the next smallest debt.
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