#how to improve credit score
8 legitimate ways to improve your credit score now
Building a good credit score is a lot like building a good reputation: It takes years of work and consistency. It’s a tortoise and a hare kind of game, acknowledges Craig Watts, spokesman for FICO, which invented and popularized credit scores. You score inches up at a tortoise’s speed, and it drops at a hare’s speed if you stumble.
That’s disheartening news if you have a bad credit score — but that doesn’t mean you’re out of options. While it’s true that the best way to ratchet up your credit score is to pay off your bills and loans on time each month for years, there are a several ways you can nudge up your score, starting today.
1. Piggyback. If someone with high credit score (usually a family member) is willing to add you as an authorized user to one of their credit cards, you’ll start reaping the benefits of their strong history. FICO is fine with the piggybacking notion for family members, says Watts. Within that context, there are ample opportunities for education, shared experience and coaching on how to use credit. But don’t buy into a company’s offer claiming that, for a hefty fee, it can boost your score by piggybacking on a stranger’s account. A revised FICO scoring formula, due in 2009, will minimize the positive impact of piggybacking between strangers.
2. Report errors. An oft-cited study by the U.S. Public Interest Research Group found that 79 percent of credit reports contained a mistake — and a quarter were errors that could lead to the denial of credit. Head to www.annualcreditreport.com to check your report for free — and send a letter to bureaus to clear up mistakes. If you get those errors cleaned up, it can make a big difference, says Chris Farrell, economics editor at public radio’s Marketplace Money.
3. Get a rapid rescoring. Generally offered only at the time of a home purchase, rapid rescoring can help clean up errors fast, says Liz Weston, author of Your Credit Score. If there’s a known error on an account, and you can provide legitimate documentation showing it’s an error, you can get a quick recalculation of your score to help with a lending decision, she says. Judgments are made within 72 hours. Because of its expense — generally more than $100 for each disputed line — it’s usually valuable only to those who need changes quickly for a substantial loan. Though it’s not an option offered directly to consumers, a broker can arrange for this service.
4. Automate. Late payments can demolish credit scores faster than you can say Where’s a stamp? If absentmindedness accounts for many of your late payments, it may be worth heading online to sign up for automatic payments. Automatic bill payments is a terrific way to make sure you don’t accidentally miss a payment because it got lost in the mail, or it fell behind the desk, or it got ignored when you were on vacation, says Watts.