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Tips To Raise Your Credit Score

What is a Credit Report ?

Before you can raise your credit score you need to know what you are up against. Have you ever wondered exactly what information appears on your credit report and why the credit bureaus are interested in collecting all this personal information on each and every one of us? Well almost all of us – if you are in the fortunate position to have never had to apply for a credit card, personal loan or taken out insurance there will be no credit file in your name. This could however be to your detriment if you do ever need credit, as without credit history the financial institutions are hesitant to loan money.

The information that appears on your credit report is collected and maintained by the credit bureaus for the purpose of selling this information to any person or entity that has a legitimate need for it. Included on your credit report is information that could influence decisions made by creditors, employees, financial institutions and insurance companies. Not only does your credit report contain information regarding your payment of debt but also includes information on any legal action taken against you, whether you have been arrested or filed for bankruptcy. Any information that could increase your credit risk will usually translate into higher interest rates or loan and insurance applications being declined.

Sign of the Times - Poor Credit Scores


The economic climate has given rise to millions of consumers with a low credit score. When the economy booms people tend to spend to their limit and max out all their available credit. That is fine when all goes well and you are able to afford your monthly repayments.

Unfortunately now that the recession has hit America people are feeling the pinch and more and more are finding it difficult to keep up their monthly payments.

Request Your Free Credit Report

The Fair Credit Reporting Act states that you are entitled to one free credit report annually from each of the three credit bureaus. Together with your credit report you are also entitled to a list of all credit report requests in your name during the previous 12 months and any requests relating to employment during the previous 24 months.

There are circumstances under which you are entitled to a free credit report over and above your free annual credit report. This includes situations where you request a copy of your credit report within 60 days of an application for a loan or insurance being denied.

Other situations which entitle you to a free credit report are when your report is inaccurate as a result of fraud or identity theft. People on social welfare may also request a free credit report as well as unemployed people who plan to get work within 60 days.

Get Your Credit Report and Check It for Errors

To err is human, to forgive divine – Alexander Pope.

Well unfortunately the people working at the Big Three Credit Bureaus are human and they do sometimes make errors. This fact is illustrated by the findings of a recent study by the National Association of State Public Interest Research where it was found that 25% of all credit reports contain some form of misrepresentation which could lead to an application for a credit card, loan or job being declined. It is therefore of utmost importance that you not only request a copy of your free credit report annually but scrutinise these reports for any errors.

The onus is on you to request and scrutinise these credit reports. Errors that are commonly made are incorrect (too low) credit limits and payments that are misrepresented as late payments that were actually made on time.

It is extremely important that any errors which could influence your credit score be corrected as soon as possible. Ensure that you have supporting documentation (bank statements or copies of receipts) that will substantiate your claim and send these together with a certified letter to the credit agency or agencies when requesting a correction of any errors on the credit report. It is advisable to attach a copy of the credit report with the disputed issue clearly marked.

The credit bureaus have a time frame of 30 days from the date of notification of the error/s to correct any incomplete or inaccurate information on the credit report in accordance with the Fair Credit Reporting Act.

Bank’s use your credit score as the yardstick to determine whether or not to approve or decline credit. If you do have a low credit score some bank’s may still approve your application for credit but your low credit score will cost you dearly.

Clients that are perceived to be a higher credit risk (based on low credit scores) are charged higher interest rates to mitigate the increased risk exposure.

Below are a few easy to follow tips on improving your credit score.

Pay on due date

Pay on due date

Reduce debt-to-credit ratio to 30%

Reduce debt-to-credit ratio to 30%

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Pay All Obligations On Due Date

As payment history constitutes 35% of your credit score an obvious way of increasing your credit score is to pay all obligations by due date. A single late or missed payment can cause your credit score to drop into a lower credit score range as it can reduce your credit score by up to 100 points.

Reduce Your Debt To Credit Ratio

Ideally your debt-to-credit ratio should be no higher than thirty percent. If you can afford to, pay off your credit card balance so that the amount owing represents 30% or less of your extended credit. This will have a positive influence on your credit score.

Even if you can afford to, do not completely pay off your balances on your credit card . Having credit card with zero balances may reduce your credit score. Maintain a minimum balance on credit cards of at least $10. This will ensure that your payment and credit history is maintained and as your credit history contributes 15% towards your overall score you want to retain as much credit history as possible.

Know What Your Credit Card Companies Are Reporting

It is important that the credit bureaus are aware of both your outstanding balances and your credit limits. These figures are used to determine your debt-to-credit ratio which has an influence on your credit score. Make sure that your credit card companies are reporting both these figures.

Although most lenders report both the balance and credit limit there are a few who are in the habit of only reporting the outstanding balance. In the absence of the credit limit being reported the bureaus assume that the credit limit and the outstanding balances are equal amounts. This will lower your credit score as your debt-to-credit ratio for those credit cards will be estimated as 100%.

Make Sure You Obtain a Deletion When Appropriate

When you settle debt, either directly with a creditor or when you pay a collection, make sure that you obtain a deletion as opposed to a “paid collection”. Both a paid or unpaid collection have the same negative impact on your credit score. Request your creditor to delete any entries that they have put on your credit report. Without a deletion your credit score will not improve despite the fact that you have paid the collection.

You may have to pay a deletion fee but it will be worth it. Request a letter acknowledging that the creditor agrees to delete the entries. You can then submit this letter directly to the credit bureaus which means you do not have to rely on or wait for the creditor to notify the credit bureaus.

Increase Your Current Credit Limit

Another means of reducing your debt-to-credit ratio is to apply for an increase in your current credit limit but not utilize the increased credit. Before doing so it is recommended that you first establish whether or not your lender would be prepared to do so without running a credit report.

In terms of the Fair Credit Reporting Act (FCRA) a company may not pull a credit report without your prior authorization. You will be entitled to claim $1000 should an unauthorized hard inquiry appear on your credit report., according to the FCRA rules. Keep inquiries to a minimum as new credit applications count for 10% of your credit score.

Secured Credit Card

If you have sufficient cash to deposit as collateral then this can be utilized to get a secured credit card. This is an ideal way of increasing your extended credit limit if you have dropped into a credit score range that is impeding your ability to obtain a regular credit card. These credit cards offer the same benefits as a regular credit card and are subject to similar terms and rules. These cards attract an annual fee and both the fees and interest rates offered vary tremendously.

It will pay you to shop around before making a decision on any specific secured credit card. Not all lenders report to all three credit bureaus, namely Experian, Equifax and Transunion. It is recommended that you choose a lender that does.

Although the lender has the option of utilizing funds in the deposit account to recover any monies owing should you default on a payment this is the last thing you want when trying to increase your credit score. Pay your bills on time and keep your outstanding balance on the card as low as possible.

Not all bank’s offer secured credit cards to people who have a low credit score but many credit unions do offer secured credit cards to their members. The credit unions usually offer lower interest rates and waive the annual fee.

Secured Credit Card

Beware of Balance Transferring


Beware of Balance Transferring

Although it may be very tempting to do so beware of transferring the balances on all your credit cards to one account that offers very low interest rates. If you recall earlier on in this article I mentioned that your debt-to-credit ratio should ideally be 30% or less. Only if this can be achieved will it not be detrimental to your credit score. A higher debt-to-credit ratio will lower your credit score .

Request Your Creditors to Re-Age your Credit Score

If your account is with a creditor is at least 9 months old, is currently paid up to date and you have paid the last three consecutive payments on time and in full then you may request re-aging from your creditor. This will remove your status of delinquency on your credit report and will improve your credit score. This service is free and if you have demonstrated your commitment and ability to pay your account on time is the quickest means of increasing your credit score.

Although this list is not exhaustive it is a brief guideline for people looking for easy ways to improve their credit scores.

There are many good books available and many places to search for more tips on improving your credit score. Do your own research or seek professional advice - the bottom line is your credit score counts and only you can raise or lower your own credit score.

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FICO Reveals Damage Points

Recently FICO revealed the number of points that a consumer would forfeit for the various credit missteps.

As can be seen from the table to the right the higher your credit score range the more you are penalized for any mistakes.

Read The full article :

FICO Reveals How Common Credit Mistakes Affect Scores


Joy from United States on July 31, 2013:

Great hub.

Thanks for sharing. Credit score plays an important role in our financial life.

One important things-Beware of credit score raising frauds. Always check your credit score regularly and keep your eyes on credit scams and fraud.

Missy Mac from Illinois on November 20, 2012:

Thanks for the informative article. I am working on my credit and just offered an opportunity for a new credit card. This article provide some great reminders and tips.

Laura du Toit (author) from South Africa on October 14, 2011:

Thanks Patbess! Credit Scores are one of the most important numbers in our financial lives today.

nwwebservices on January 27, 2011:

Great article with very good credit advice. Thanks much...

lbowen444 from Victoria, BC on November 21, 2010:

Keep up the great work Laura, well done!

soneblom from South Africa on October 03, 2010:

Thanks Laura! for making it all so clear! :-)


Laura du Toit (author) from South Africa on September 01, 2010:

Thanks for the comment Winsome!

Winsome from Southern California by way of Texas on September 01, 2010:

Laura what a nice job you did here. Thank you for some new ideas about the credit process. =:)

Finance on April 22, 2010:

These were some very useful credit score tips.

I have always tried my best to get the best information for getting better credit score. Thanks for the tips!

Fluffymetal from Houston, Texas on April 02, 2010:

Great information. Rated it up!

gedeputra from jakarta on March 19, 2010:

nice information laura.. I wish if my country have the system like that...

cupid51 from INDIA on February 08, 2010:

Very good information which everyone will be interested to know. Thanks for sharing.

Laura du Toit (author) from South Africa on January 26, 2010:

Thanks Ladybird - Glad you enjoyed the hub!

Ladybird33 from Fabulous USA on January 25, 2010:

BTW, like your hubs! Very informative.

Ladybird33 from Fabulous USA on January 25, 2010:

Laura, this is some wonderful stuff and will help me very much. I book marked it. I have a great score but my rental properties have made it drop (which pisses me off) but that is a whole other story. Thanks for sharing. My best, ladybird

Laura du Toit (author) from South Africa on December 08, 2009:

Thanks Dohn

That is one compliment I will treasure. Let's hope Google does love this Hub!

dohn121 from Hudson Valley, New York on December 08, 2009:

This is the best hub I've read so far concerning improving one's credit. I hope Google loves you for it :D

Laura du Toit (author) from South Africa on December 06, 2009:

Thanks Habee - I think medical bills are a common problem. They are not planned and can be extremely high. Good luck!

Holle Abee from Georgia on December 06, 2009:

Great tips, Laura. I need to raise mine a few points. My prob is medical bills.

Laura du Toit (author) from South Africa on December 02, 2009:

Thanks Paradise

Always glad when you stop by!

Paradise7 from Upstate New York on December 02, 2009:

Interesting. It isn't an issue for me at the present time, but hey, you never know. An informative and well-researched hub, and it makes sense all the way through. Thank you.

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