How to Clear Up Credit Scores

Your credit score, also known as your FICO score, is a compilation of your credit history and is the most important piece of financial information about you. If your credit score is low, you can be denied home and car loans, rental leases, and more. Your FICO score measures your payment history, outstanding balances, length of credit history, new credit and types of credit. To improve your credit score, you need to work on each of those areas.

Instructions

1

Do everything you can to keep your credit card debt from going to a collection agency, because it will stay on your credit report for seven years. Work with your credit card companies, and always pay the minimum balance if you can't pay more.

2

Reduce your debt. Pay off your credit cards that are closest to reaching their limits and the ones with highest interest rates. Stop making unnecessary purchases, and put all extra money to paying off your debt.

3

Don't close your credit cards once you've paid the balance, because it's good to have unused credit. However, it's not wise to open new credit cards to have unused credit.

4

Don't apply for numerous credit cards and/or loans. Every time someone seeks your credit report for a credit card or loan, it's noted in your file. If you do this too often, it will lower your credit score. Apply for credit when you need it.

5

Manage your credit cards responsibly. If you don't have any credit cards and haven't applied for loans in a while, get one to prove that you can manage it responsibly. Someone who has never had a credit card is more risky to banks and credit card companies than someone who has had a credit card and always paid it on time.

6

If you are having a difficult time trying to pay your credit cards and loans, call the National Foundation for Credit Counseling at (800) 388-2227 for a legitimate credit counselor.

7

Check and request your credit report at least once a year. You can obtain one credit report per year for free from each of the three credit bureaus. You should be informed regarding your score and make sure that there aren't any mistakes listed.