Best Ways to Improve a Credit Score

Having a poor credit score is a situation in which no one wants to find themselves. A low score cannot only result in being denied a loan, it can cause a potential employer to turn you down for a job. Unless the low score is due to inaccurate information on your credit history, there's no "quick fix." However, the best ways to raise a credit score are pretty straightforward once you understand how the scores are determined and what is required to get a good score.

Correct Errors

A credit score is calculated using the information contained in your credit record. If the information is wrong due to errors or someone fraudulently using your identity to get credit, your credit score may suffer. You can get a free copy of your credit report from each of the major credit bureaus once a year. The free report doesn't include your credit score, but that's not important. If you make sure your credit record is accurate, your credit score will be too. The Federal Trade Commission authorizes only one provider for free credit reports, AnnualCreditReports.com. You can order your report online (See link below.) or by phone at (877) 322-8228.

You should check your credit history with each of the major credit bureaus. Each compiles your report based mostly on voluntary lender reports, and they may not all have the same information. If you find a mistake on a report, go to the appropriate credit bureau website (Experian.com, Equifax.com or TransUnion.com). Each provides online tools to initiate a challenge of credit information and contact data if you need talk with them directly.

Manage Credit

A low credit score may be due to past problems managing credit. The best way to raise a credit score in this situation is to understand what factors affect your credit score and develop a plan for eliminating problems. First and foremost is to pay bills on time---this counts far more than anything else in determining a credit score. If you are deeply in debt; however, timely payments may be difficult. What's worse, having too much debt for your income is the second most important determinant of your score.

The best ways to raise your credit score if your monthly expenses are too high are to find ways to cut unnecessary spending and stop using your credit cards. This frees up money to get your bills current and starts you on the road to reducing your total debt. However, the reality is that this may not be enough. If not, consider getting a debt-consolidation loan. Essentially, the lender pays off several of your debts, and you end up with smaller monthly payments to this lender, often at lower interest rates.

Get Help

Coping with a bad financial situation alone may not be realistic. Fortunately, you can get credit counseling and assistance negotiating with your creditors through non-profit agencies and usually at no charge. To find a counselor in your area, call the National Foundation for Credit Counseling (NFCC) at (800) 388-2227 or Consumer Credit Counseling Services (CCCS) at (888) 656-2227. NFCC is a national organization that can refer you to a member nonprofit counseling provider. CCCS is one of those member organizations and provides counseling directly through its local affiliates.

Avoid being ripped off by scam artists who claim for a fee, of course, that they can get you reduced interest rates on your credit cards or remove negative information form your credit report. You can negotiate interest rate reductions yourself or with the help of one of the services mentioned above. Only errors can be taken off a credit report. In most cases, accurate information legally must remain on the report for a specific time period--how long depends on the type of information.