How to Raise Your Credit Score



The end of Fight Club features Edward Norton and Brad Pitt blowing up the various credit bureaus, and eliminating their ability to function.  Sadly, neither Norton nor Pitt is doing this in real life; they're off doing voice-overs in the Simpsons and killing zombies respectively.  While it's nice to pretend that everyone's credit history can be simultaneously wiped clean in a fraction of a second, the truth of the matter is that you're stuck with the real world.  As such, you may want to get used to the idea of doing more proactive things if you're looking to improve your credit score.

The first thing is to request a credit report.  In the United States at least, Federal law mandates that the various credit bureaus offer a free report once per year.  Start off by requesting yours from the three major bureaus; Experian, TransUnion, and Equifax.  These credit reports can sometimes contain errors, which means your score could be falsely held accountable for things that didn't happen or aren't your fault.  Further, it allows you to check for fraud and identity theft committed in your name.

Your credit score is often based on the credit ratings from all three bureaus.  It may seem somewhat redundant, but you're going to want one of these reports from each one of them  These three companies are all rating the same thing (a risk assessment based on how likely you are to pay your bills), but each of them does it completely separately from the rest.  As such, you may find some companies report certain issues but not others.  Furthermore, you may find some of those errors on multiple reports.  You're going to need to take up the issue with each bureau.  This can be a pain, but it's definitely worth the time.

You may not be surprised to learn that you should cancel excess credit cards.  Prepare yourself to be surprised than, because recklessly canceling credit cards can actually lower your score instead of improving it.  One way the various bureaus judge your financially capacity is by looking at what fraction of your credit card balance is still able to be used.  If you drastically reduce your available credit, than you're making this ratio look incredibly unfavorable.  Don't be afraid to cut cards with horrific rates or terms, but don't drastically reduce your numbers in one fell swoop.

After that, all you can really do to help your score is making timely payments and intelligent choices.  Make sure your bills are paid promptly, setting alarms or reminders as needed.  In terms of credit cards, don't apply for ones that you don't truly want.  Even if they promise a short term deal or gain, it's usually a bad choice.  Processing the request, good or bad, is going to cause your credit rating to dip slightly.  The annual fees can end up costing you more money than you initially saved, and canceling the card later will hurt your ratios again.  

Be wary of services that offer to turn your credit score around quickly.  Most quick methods are actually very dangerous, and often leave you in an even worse situation than you started out with.  Time, consideration, and planning are all you truly need to get a sour credit rating back on track.
