How to Raise Your Credit Score by 10 Points

It would be nice to know that certain actions could raise a credit score by at least ten points. In reality, there's no way to predict precisely how many points your credit score will rise because of the myriad complex calculations that go into determining a credit score. The important thing is to take the steps that work with rules and logic of the scoring agencies. Those are the moves that are likely to increase your score.

Instructions

1

Learn about the FICO scoring system. FICO, named after the Fair Isaac company which devised the scoring system, decides credit rating on the basis of an algorithm. People with higher credit scores, for example, lose more points for financial gaffes than people with low credit scores. Steps that appear likely to raise your score -- such as closing down old credit accounts or refusing to use existing credit actually can hurt your score. Avoid these actions.

2

Clean up any errors on your credit report. Order your free annual credit report and see if there are mistakes. Send documents showing the errors and a letter of dispute to the credit reporting companies so they will remove the errors from your report.

3

Pay down debts rather than applying for lower interest cards. Your credit score will be negatively impacted by transferring balances from card to card. You should have only a few cards and the balance on them should be as low as possible relative to the amount of credit extended. If you can get the balance below 30 percent of the credit available, it will improve your credit rating.

4

Redistribute credit. Credit agencies look at use of credit. They score higher for people who have credit cards or lines of credit with low balances. If you can't reduce your balance to 30 percent of your limit, see if you can shift some of the debt to another existing account. Alternately, ask to increase your credit limits, which reduces the amount used -- but only do so if you can discipline yourself not to use the extra money. A third method of diluting negative credit is to add positive credit to your account. Some accounts, such as cell phone accounts, are rarely included. Ask the credit reporting agencies if they will add those.

5

Pay off debts before they enter collections. Don't pay off debts in collection to increase your credit rating. This can actually have a negative impact on your credit rating, according to Liz Pulliam Weston of MSN Money. Some old charges drop off your credit rating in time. What matters most is what the original creditor says about the amount due. When an account goes into collections, the creditor often reports the amount due as zero.