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Tips On Improving Your Credit Correct mistakes
Your credit score is only as good as what shows up in your credit report. Review your reports from all three credit bureaus for accuracy once a year as well as several months before applying for a loan. Changing a mistake on your report - such as a payment that is wrongly labeled as late -- can take 30 days to three months, sometimes longer.
Pay your bills on time.
This is always a good practice, and it's especially critical that you make prompt payments close to the time you need a loan. That's because a late or missed payment in the last few months is likely to lower your score much more than an isolated late payment five years ago.
Reduce your credit card balances
A heavily weighted factor in your FICO score is how much money you owe on your credit cards relative to your total credit limit.
Pay off debt rather than moving it around
Since the ratio of your credit card balance to your credit limit is key, closing out an account and transferring the balance simply means you increase that ratio, which is likely to lower your score. In other words, stay away from teaser credit cards that lower the interest rate on transferred balances.
Don't close unused credit card accounts near loan time
If you have several credit card accounts but are only using a few of them, you'll only raise your balance-to-limit ratio if you close the unused ones. You also shouldn't open new accounts when applying for a loan if possible. A new account will lower the average age of your accounts, a factor in your FICO score.
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