Financial Advice Q&A

New Member
pink roses
Posts: 1
Question
How can I improve my credit score?
[ Edited ]

How long to improve my credit score? What can I do to improve credit score?

Other Answers: 1
Community Manager
JosephMontanaro
Posts: 64

You've probably heard the saying, "it's a marathon, not a sprint." Well, that probably captures the essence of the first part of your question.  Typically, it can take months if not years to boost a credit score that has been driven down into the dumps by years of ill-advised credit moves. The reality of how long it takes you to boost your credit score will depend on where you stand and what's happened to this point. However, we do know the various factors that go into the score (this info from the myFICO website) and thus can map out an approach to help you improve your score:

 

Payment History 

This is the biggest factor in your score and the "to-do" is pretty obvious: Make on time payments everytime. Get and keep everything current. The good news is that even if you've made mistakes, as time passes those mistakes will have less of an impact on your score. 

 

Amounts owed

The less you owe the better off you'll be, so as you pay down debt your score should improve. Here there's something called a utilization ratio, which can be a bit tricky to understand. When your various credit lines (credit cards, installment loans, etc.) are grouped you have a current balance (what you owe) and an available balance (or initial loan amount).  If you divide what you owe by the available balance you get the utilization ratio. Of course lower is better, but remember if you pay off a credit card and close the account you could inadvertently increase your utilization ratio, so in some cases it may make sense to just put the card away as opposed to closing it out.

 

Length of history

The longer you've got a good track record, the better. If you're closing accounts, keep the older ones.

 

New credit

Whenever you request new credit (an inquiry), it has a negative impact on your score. So, while you're in the "improve your score mode" don't apply for any new accounts. That means just say no at the checkout counter when the clerk asks, "Would you like to save 10 percent today?"

 

Type of credi used

Here diversification is good. A mix of revolving credit, mortgage and installent loans (like a car loan) is a good thing.

 

So there you have it, a pretty straight forward approach to boosting your score. If you need a helping hand, consider contacting the folks at www.nfcc.org. They have a network of counselors throughout the country that can help you budget and develop a plan to get things on the right track and typically there's little or no cost. Good luck!

 

JJ

 

 

 

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