Steps That May Help You Improve Your Credit Score
1. Clear up errors on your credit report: If anything on your credit report isn’t correct, dispute it with the credit bureaus. Getting it removed or corrected can improve your score. According to Consumer Reports’ 2021 Credit Checkup survey, 34% of participants found at least one error on their credit report.
2. Pay down your balances: Accounts owed, which includes your credit utilization ratio, makes up 30% of your FICO score, second only to the longer-term strategy of always paying your bills on time. Because credit card issuers commonly report card member activity to the credit bureaus once every billing cycle, you may not have to wait long to see the benefits of reducing your credit utilization ratio. According to FICO, the lower your credit utilization ratio, the better. Keeping it below 10% – while continuing to make on-time payments – can help you establish a good credit score.
3. Resolve collection accounts: Payment history makes up 35% of your FICO score. While even a payment made 30 days late can have a negative effect, an account sent to collection – which usually happens when a bill is 120 days past due – can impact your credit score even more. While there’s no way to remove an accurate collection account from your credit report, paying off the account could positively affect your credit score – especially if it’s the only negative item on your credit report.