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Released: February 29, 2012

Help Desk FAQ

How can I improve my credit score?

Here are some tips for improving your credit:

• Pay your bills on time. Paying an account late is better than never paying it at all. A payment that is 60 days late is worse than a payment that is 30 days late, but not as bad as a payment that is 90 days late.
• Pay off credit card and other unsecured debt. 30% of your score comes from how much available credit you are currently using, so when you lower your debt, you automatically raise your score.
• When possible, keep balances at 20% or less of available credit on revolving credit accounts (such as credit cards).
• Beware of closing unused revolving credit accounts, particularly those that have a high credit limit or are among your oldest accounts.
• If you have mishandled credit accounts in the past, you need to demonstrate that you can manage debt responsibly. Re-establish credit by charging an amount you can pay in full each month. This will help you build positive credit accounts that, over time, will offset the negative ones.
• Apply for and open new revolving credit accounts only as needed, particularly if you are about to apply for a loan. (New accounts can temporarily cause your score to drop until you have used them long enough to demonstrate that you can manage them well.)
• Dispute inaccurate items and negative items over seven years old that should have fallen off your report by now.

Learn more about improving your credit report and score in Consumer Action’s Credit Reports and Credit Scores and on the Federal Trade Commission’s (FTC) website (http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre24.shtm).