How To Raise Your Credit Score

Steven Gillman

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Is it really that important to raise your credit score? Maybe. Lenders have “break points" between scores that get you one interest rate or another. Suppose you have a score of 688, and the lender drops the mortgage rate by .5% at 690. Those two points can cost you an extra $20,000 in interest on a $170,000 loan (over 30 years at 6.5% instead of 6%). Is that important enough for you? What can you do?

Eight Ways To Raise Your Credit Score

There are ways to raise your credit score. Some of them take more time than others to have an impact, but if you start working on it now, you can boost that score before long.

1. Check credit reports for errors. If there are errors that are hurting your score, contact the credit reporting agency that issued the report and challenge them. The agency is obligated to investigate and correct any mistakes within thirty days. If a creditor doesn't respond to their inquiries, they have to automatically remove the item in question (you may have to remind them about this part of the law).

2. Pay off balances every month. It is just good for your future, as a way to keep you out of excessive debt. It can save you a lot in interest also. Finally, it demonstrates your ability to manage your debt, and so increases your credit score.

3. Have the right number of credit cards. At least two is best, but having more than five or six can actually lower your score.

4. Pay bills on time. Borrow money to get those bills paid on time, if you have to. Paying on time has the biggest positive impact on your credit score. Unfortunately, paying off old delinquencies won't immediately raise your credit score, because these will still show as being paid late, but start paying on time now, and with time, these old late payments are deemed less important.

5. Manage your credit card balances. It's best for your credit score if the balance on a given card is less than 50% of the limit on that card. Manage your use of your cards to keep the balances below this amount. If, for example, you have three cards with limits of $2,000, $3,000 and $2,500, it is better to have a $600 balance on each than $1800 on one.

6. Don't apply for too many cards and loans. These applications generate inquiries on your credit reports. Having oo many inquiries in a short time lowers your score. Avoid applying for a lot of cards in a given year.

7. Keep and cancel the right cards. When you close accounts or cancel cards, do it right. Old accounts are better than new ones for your credit score. Keep those old ones open, even if the balance is zero. Also, because it's best to keep balances below 50% of the card limits, you might consider canceling your lower-limit cards if you regularly keep balances on your cards.

8. Be careful about whom you borrow from. Furniture stores and others help you finance your purchases, but through finance companies. This can lower your score. If you can't pay cash, it is better to borrow the money from a bank or credit union.

Maybe you noticed that this is almost a list of things that lower your credit score. It basically is, and you should keep that in mind. Paying things bills on time and avoiding the things that lower your score - that is the best way to raise your credit score.

Steve Gillman has invested in real estate for years. To learn more, get a free real estate investing course, and see a photo of a beautiful house he and his wife bought for $17,500, visit


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