There is no magical solution on how to raise your credit score or improve your credit report.  Credit repair services are a rip-off and expensive.  Whatever they claim they can do for you, you can do for yourself.  For FREE.  Living with bad credit is very expensive.  Doable, but expensive.  You are looking for a credit card – you will get one with high interest rate.  Want to buy a car?  High interest rate.  Rent an apartment – high deposit.  A better credit score opens up new opportunities for you, or just the possibility of knowing you can gain access to credit whenever you want.

1. Paying your bills on time is the #1 way to improve your credit score

Payment history is the biggest factor in the calculation of your credit score.  It accounts for 35% of your scores using the FICO scoring model.  People with the highest credit score have less than a 1% chance of defaulting/being late on bills.  A missing payment of 30 days is bad, but a 60-day or 90 day missing payment is even worse.  Consecutive late bills will eventually lead to charge-offs, collections, or foreclosures – derogatory marks.  These remain on your credit report 7 years from the first day of delinquency.

2.  Get a copy of your latest credit reports

It’s a good idea to check your credit report regularly.  Right now, annualcreditreport will provide you with free weekly reports from all 3 credit bureaus.  Review your credit reports for any errors and dispute any discrepancies.  Credit reports ordered online typically come with instructions about filing disputes, or you can always phone or mail.

3.  Reduce your debt

A $5,000 balance on a credit card with a $10,000 has a credit utilization rate of 50%. It is recommended you stay under 30%, but under 10% is ideal.  Anything over has a big impact on your scores.  Carrying debt month to month not only reduces your credit score but is expensive.  Monthly interest rate fees can add up.  Having maxed out cards will also cost you precious points.  Your loan balances also affect your credit score.  The closer your loan balance is to the original amount you borrowed, the more it hurts your credit scores.

4.  Don’t close old credit cards

You should never close your oldest accounts, unless absolutely necessary.  The age of your credit history accounts for 15% of your total credit score.  A longer history will also show to lenders that you have experience using credit.  Just make sure the account is still in good standing.

5.  Increase your credit line

Some credit card companies will automatically increase your credit line after 6 months, granted your account is in good standing.  There are rules on when you can receive one, but you can request an increase at any time.  A higher credit line lowers your credit utilization ratio, which helps improve your credit score.