Improve Your Credit Score

Improve Your Credit Score

Although your credit score is a factor in determining your mortgage rate, your credit score also influences rates you get on credit cards and car loans. It can also have an impact on your homeowner’s and car insurance rates, and it may even be considered when you apply for a job! Here are some tips on improving your score.

Get a Free Credit Report

Your credit score is only as good as your credit report, and getting a copy is both easy and free. The Federal Fair Credit Reporting Act (FCRA) requires each of the three major credit reporting companies, Equifax, Experian, and TransUnion, to provide you an annual report at no cost. You can request it in one of three ways:

• Online at www·annualcreditreport·com
• By telephone at 877-322-8228
• By mail at Annual Credit Report Service, P.O. Box 105281, Atlanta, GA 30348-5281

Reports are limited to once from each company every 12 months. Otherwise, you pay a fee of $10 per report.

In addition to your name, address, Social Security number, and date of birth, be prepared to provide previous addresses if you’ve moved in the last two years as well as at least one piece of personal information only you would know, such as a regular monthly payment amount on a mortgage or auto loan.

AnnualCreditReport.com is set up by the three major credit reporting companies, and it’s the only authorized Web site that exists. Other sites may offer a similar service but do so in an attempt to sell you unnecessary services or collect personal information. The official site will never solicit you or sell your name or information.

Understand Your Credit History

After you have your report, focus on the five main components that comprise your credit history:

• Personal information: This includes your name (as well as former names), current and past addresses, Social Security information, and employment history, often with salary information. This information is collected from previous credit applications and is often incomplete or inaccurate.


Whether you’re single, married, divorced, or separated, your credit history should include information only about you. Spousal information should be included only when you’re both legally obligated to pay on a listed debt or if you’re both permitted to use a particular account.

Your personal information doesn’t contain information about your religious preference, age, net worth, race, political affiliation, medical history, criminal record, or any other personal information not directly related to credit.


• Monthly account information: This section includes information from financial institutions including major credit card issuers, major department stores, and other creditors you pay on a monthly basis. The information includes credit limit, current balance, maximum amount ever borrowed, payment history (whether you pay on time or take 30, 60, 90, or more days to make a payment), date opened, and any write-offs or collection actions ever taken.
• Account information reported only when delinquent or in default: Creditors such as utilities, insurance companies, doctors and lawyers and other professionals, smaller retailers, and some property management companies report only when an account is past due or collection proceedings have begun. For this info to be included in your report, the creditor must report this information within 90 days of taking collection action. This date is then used to start the seven-year clock, during which this very negative information can remain on your report.
• Public records: All three credit reporting companies pay data collection companies to pull information from governmental agencies. This is information anyone can obtain through public records such as court filings (lawsuits, divorces, judgments, and liens), foreclosures, and bankruptcies. More recently, it also includes child support enforcement delinquencies.
• Inquiries: Inquiries may be soft or hard. Soft inquiries aren’t reported or of concern to potential creditors. This category includes
Requests you make of your own report
Inquiries that are part of unsolicited, preapproved credit card offers
Periodic reviews of your credit history conducted by current creditors

The second type, hard inquiries, includes inquiries made when you apply for credit of any sort. These inquiries can negatively impact your credit history. Too many hard inquiries makes it look as if you’re applying for credit wherever and whenever you can, so obtaining credit becomes more difficult.

Minimize hard inquiries by not signing any form that allows a creditor to look at your credit if you’re just casually shopping for a car or to refinance your mortgage.