Can Credit Scores Improve?

Even the worst credit score can improve over time. According to the Federal Trade Commission, most bad debts are automatically eliminated after seven years and bankruptcies disappear from a credit report after 10 years. To improve your credit score, credit experts at the Fair Isaac Company (FICO) suggest these tactics: review your credit report for accuracy, eliminate bad debt, choose credit carefully and limit credit card use.

Review Credit Report

Review your credit report from each agency (see Resources). Look for errors, missing information or forgotten debts, which can reduce your score. Ask the agency to remove any unverified disputed charges with a creditor. Request that judgments and defaults over seven years be removed from your report. Provide missing information to the agency, such as any positive account histories that are missing from your report. Check that the agency has your correct personal information and is not confusing you with someone else.

Eliminate Debt

Pay your bills early to avoid interest charges and penalty fees. Good payment patterns on recent credit accounts for 35 percent of your score, according to the Fair Isaac Company. Reduce the amount of debt you carry. Charging your cards to the limit increases your amount of debt compared to your available credit, decreasing your score. Improve your score by paying off one card at a time while making minimum payments on your other cards.

Choose Credit Carefully

Choose and build your credit carefully. A high number of new credit inquiries on your credit report can decrease your score. Avoid applying for multiple credit cards in a short period of time. Before applying for a credit card, review the disclosures. Does it have an annual fee? What is its interest rate and credit limit? Doing so will help you to determine the benefits and disadvantages of owning the card.

Limit Credit Use

Limit the amount of credit you use. Carrying a zero or low balance on your cards and maintaining a high credit limit will increase your score and keep you from going into debt. Rotate your credit cards and use only one or two at a time. Resolve to not charge more than 10 percent of the credit limit on each card and pay off the balance each month. Use cash whenever possible for daily purchases and use your card for financial emergencies.