Hi, I got myself into some debt a few years back and have been working on paying it off, but is there anything else I can do to improve my credit score? Or speed this process up somehow?
Great question. The best way to improve your credit score is to have a nice, long history of on-time payments. So making sure you are hitting deadlines and paying the full required payment is paramount to improving your score. In the meantime, if you have any outstanding collection items, judgments, or garnishments pay those off or settle them. By cleaning up those negative items you will see a quick improvement in your score. I wrote a financial guide on what makes up a credit score here: http://www.brightscope.com/financial-planning/advice/guide/1511/What-Makes-Up-A-Credit-Report/ that may provide some additional insight for you.
Emma - The factors the impact your credit score and the percentage weighting of their impact is as follows:
Payment History 35% Amounts Owed 30% Length Of Credit History 15% New Credit 10% Types Of Credit Used 10%
I would encourage you to focus on the most impactful areas as your priority . . . make sure you pay amounts owed on time and do your best not to take on any additional credit which will impact your amounts owed.
For more helpful tips and details about how to improve your credit score, I recommend this post by Ramit Sethi:
Hi Emma, let me add to the two great answers. Let me remind you that my answer applies only to increasing your CREDIT SCORES quickly, not necessarily as the best debt management techniques. This is something that you might do immediately before trying to qualify for a refinance of a mortgage, for example.
A couple of quick things that you can do is to insure that ALL of your current debt accounts are less than 80% max of the available limit, close any "available debt" that you do not need(ie. store credit cards, gas cards, etc), but DO NOT close your OLDEST credit cards.
Again, it is better for your credit scores to have 3 credit cards with 75% balances than it is to have 1 card maxed out, 1 paid off, and 1 with a 50% balance. Once you have done this, you can then immediately contact credit score agenices and "dispute" their current reports on you. This will force them to immediately rescore your credit profile and your credit score should go up immediately. The reason to do this is that the major agencies only update your credit score automatically every 90 days or sometimes longer so you may clean up your credit profile and not get "credit" for it for months. And as the others have said, dispute inaccurate information, pay on time, pay more than the minimium, and get Identity Theft Protection.
Hi - These other answers are all good advice.
In my experience, people with debt issues decide for some unknown reason that focusing on improving their credit score is going to make the debt go away. It's not. Focus on paying off your debts. If you have "debt problems" you shouldn't be borrowing more money anyway. Pay off the debt, settle with collection agencies.
Get a free copy of your current credit report at www.annualcreditreport.com and go through it with a fine-tooth comb - particularly any items in the "negative" section. Systematically attack the problem. There are many debt calulcators out there that can help you slice and dice the numbers - a good one can be found at www.powerpay.org. Good luck!