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How to Improve Your Credit Score in Six Easy Steps

The following is a guest post from Dominique Brown, a financial planner, landord, personal finance blogger and video blogger. He is the owner of where he talks about everything from being a new father to his worst financial mistakes. He is also the owner of where he talks about real estate exclusively. The Huffington Post and  H&R Block. You can find him either on Twitter, Facebook, Youtube or Instagram.

I don’t have to tell you that having a bad credit score is a bad thing. However, what many people fail to realize is how many things are affected by your credit score. We all know how you need good credit to get into real estate, but did you know you could be turned down for a job because of a your crappy score? That to me means that your credit score should be a high priority. I don’t care if you are debt adverse or a debt lover.. credit matters.

Unfortunately, there isn’t any magic way to increase your credit score. However, you can improve your score within few months by carefully applying several strategies together, if your credit report doesn’t have some serious black marks such as foreclosure or bankruptcy.

First, you should know where you stand right now. Though you get a free credit report every year, you have to shell out some money to see your FICO scores. Go to to purchase your Equifax and TransUnion scores. Experian no longer sells its FICO score to consumers, but it does sell your score to lenders and banks.

Now follow these tips to improve your credit score:

1        Review Your Credit Report

If you haven’t done it already, review your credit report for errors. Make sure that the data entered is accurate and correct. Sometimes people see late payments incorrectly listed. If you notice any errors, dispute them with the reporting agency and the credit bureau. I go into a bit more detail in this video on identify credit report errors.

2        Pay Your Bills on Time

Late payments affect your credit score in a big way. If you are unorganized or used to making late payments, set your bills up for automatic withdrawal from your bank account. If you are 30 days past due, lenders report the delinquency to credit bureaus and this blemish remains on your credit report for seven years. If you have to be late.. be 29 days late :-)

Certain banks will remind you through email or text message when the payment is due. If you have missed any payments in the past, catch up, and don’t make that mistake again. The longer you pay the bills on time after the previous mistake, the better your FICO score will be. Also, if you happen to be late. Call the lender immediately and ask for more time and that they don’t report it! You don’t get dinged for asking.

3        Pay Your Credit Card Balances First

You know what? Revolving debts (such as credit cards) seem to have more profound effects on your score than installment loans (mortgages). The reason being, typically people are above the magical 20% credit utilization amount on their credit card. So, you get a nice boost by paying your credit cards down and getting within acceptable credit utilization limits.

4        Don’t Cancel Unused Credit Cards

If you think you can improve your credit score by canceling one or more of your unused credit cards, change that thinking. It actually lowers your score. Yup.. who whould have thought that. Why? Well when you cancel your credit cards you’re cutting your total limit, which increases total credit utilization. You’re also shortening length of total credit history, and you will erase all that good payment history since a closed credit card account will not remain on your credit report after 7 years.

5        Do Not Max Out Your Credit Cards

The rule of thumb is to keep the credit card balances below 20 percent of the credit limit. Try to spend no more than $6,000 on a $30,000 line. If you need to spend more, simply use other cards to reduce the load on any single card, or do what I highly recommend and pay in full. If the creditors report a heavy balance on any of your credit cards, it will affect your score.

It is better to have two credit cards with balances below 20 percent each, than to have only one card that you max out every month.

6        Do Your Loan Shopping in a Limited Time Span

A number of credit inquiries (for home loan, or a car, etc.) can pull your credit score down. But when you do it within a short time, the system doesn’t treat it unfavorably. So, whenever you need to shop for a loan, do it within a maximum of two week period.

So there you have it. Quick and easy tips for improving your credit. Follow these steps and your credit score will improve. Have you ever taken steps to raise your credit score? What did you do?

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