How To Improve Your Credit Score in 4 Simple Steps

1. Know your score.
First, you need to know your score. You can pay for your score via the three major credit bureaus. When accessing your score, be careful to avoid ongoing “credit monitoring” offers — these offers are often served up to you automatically when you are pulling your score. As you check out, ensure that you’re only paying to pull your score, and not signing up for repeat charges. If your score is lower than the “good” or “excellent” categories, you may consider prioritizing areas for improvement.

2. Pull your credit report.
Your credit report includes the data that contributes to your score, so ensure that you have a recent copy of your report to help you analyze your score. While legislation in the U.S. allows you to pull a free credit report each year, credit scores are not included in that free report; ensure you have both.
When you pull your credit report, look at it carefully for errors. Credit reports include a lot of data on your credit history, reported by banks and landlords, and can contain mistakes. Ensure that addresses are correct, that the accounts listed are owned by you (or were yours in the past) and that any late payments were, indeed, paid late.
Each credit bureau has a specific process to fix any errors on your credit report, so if you find an error, take notes of exactly what you’ve done to work with the reporting agency to fix the error. Unfortunately, consumers (and not the agencies) bear the burden of putting in the work to fix mistakes. Follow up until you are absolutely certain that the error has been fixed.

3. Evaluate what you can improve.
Let’s get back to improving your score. Your FICO score is based on five primary factors, which have different weightings:

The type of credit in use refers to the diversity of your credit sources. Do you have five credit cards, but no other loans? This tends to lower scores. Or, do you have a student loan, one credit card and a mortgage? This mix may raise your score, as it demonstrates using credit for different things with different loan structures, versus a reliance on one type of credit.
This is a smaller portion of your score, so I do not recommend taking out more loans to improve your mix. You should limit your loans to what you truly need. However, if you have many types of the same credit (for example, many credit cards but no other loans) you may want to consider closing some cards. That said, any credit mix improvement will only have a modest impact on your score.

New credit looks at the recency of your accounts. In general, if you don’t have much new credit, your score will be higher compared to someone who has recently opened up several new accounts. New accounts may signal that you are over-extending yourself or aren’t able to pay your debts, which can lower your score. You can’t take proactive steps to improve this element, but you can stop opening accounts to improve this portion of your credit score.

Length of credit history is similarly something you have little control over. Generally, the best credit is old credit, and the factors in this category include how long your accounts have been open, how long since accounts have been used and how long specific account types (like credit cards) have been open. 
Like the new credit factor, there is little you can do to improve this element, though you can take steps to keep older credit, as long as it isn’t too costly to do so. For example, you can pay off a high-interest credit card that you opened in college, stop actively using it, but keep it open to improve your length of credit history over time. Note that this may only make sense if the card doesn’t include any other fees or costs.

4. Plan how you'll manage your credit in the future.
In addition to the steps above, you can take active steps to protect and manage your credit so it continues to improve in the future. Two of the most powerful steps you can take are only accessing credit when you critically need it and paying your balance on time.
If you only access credit when you critically need it, you are less likely to be tempted to fall into debt and will have a cleaner, tidier credit report. Women are often tempted by store cards that credit card issuers offer when we're shopping — I urge you to avoid these, as they are some of the highest interest-rate cards on the market, and also increase the number of credit cards you need to manage. Twenty percent off your purchase isn’t worth increased debt and stress.
Additionally, if you consistently pay your balance on time you are taking one of the best steps you can to improve your score. If you’re going to have trouble paying a bill, call your lender and work out an arrangement — many will accept a partial payment. Your lender reports missed payments to the credit bureaus, so you’ll want to work proactively with lenders to ensure they know your payment is coming, and don’t report a missed payment instead.










SOURCE: fairygodboss.com