Improving Your Credit Report and Score

Your credit report determines how much interest you will pay for your mortgage, credit card, or home loan. You need to know your score and ways to improve it.

Q. How do I improve my credit report and score?
A. The best way to improve your score is to avoid doing the things that lower your score.

Every time you apply for credit, make a payment, or miss a payment, you add information to your credit report and that affects your credit score. The companies that calculate credit scores don't reveal exactly how they do it, but they do offer general ideas for consumers. Learn more at www.myfico.com.

Pay on time. One of the best ways to boost your score is to improve your record of paying on time. Timely payment on all your debts is a must. Check your bills to see when payments are due; it may be sooner than you think. Late fees and interest penalties add up quickly and make it hard to pay the balance.

Pay more than minimum. Pay as much as you can on every account, and never less than the minimum.

Stay below the limit. Your credit score also considers how much credit is available to you and how you use that credit. If you regularly charge close to the maximum on your charge card you will hurt your credit score.

Have fewer accounts. If you apply for store credit to get a special offer or discount, you may harm your score, even if you don't use the store account often. Opening a new account and transferring your existing balances to the new account will not improve your score.

Group your inquiries. When you shop for a loan, each lender will check your credit history. Every "inquiry" is listed on your credit report. The credit scoring system sees too many inquiries as a sign of risk. Avoid this problem by comparison shopping within a short time period. If you make several inquiries about one type of loan, say a car loan, within one month, FICO counts this as only one inquiry. When you check your own report (make an "inquiry") you do not harm your score.

Wait for progress. A bankruptcy or series of late payments can lower your score quickly, and it will take time to recover. It is important to stay on a positive track. The credit scoring formulas give more weight to the recent positive history, and older poor performance fades away.

The Federal Trade Commission (FTC) works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint or to get free information on consumer issues, visit the FTC web site or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters Internet, telemarketing, identity theft and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.