It is almost always possible, regardless of your current financial situation, to take certain steps to improve your credit score. In this article I'll cover a simple three step formula for raising your credit score.
The first step is to procure copies of your most recent credit reports. The agents which maintain credit records – Equifax, Transunion, and Experian – are known as credit bureaus. Under United States' law you are entitled to a copy of credit report for free upon request. You can request this report free of charge once every year.
The reports will probably not include reference to your credit, or FICO, score itself but will contain a history of the credit accounts you have opened. To obtain a copy of this report, I recommend that you visit your local google.com and enter the terms "free credit report."
Once you have obtained a copy of each report, you need to move on to step two. Next you need to scour the report for any factual inaccuracies. It is surprising, and somewhat alarming the frequency with which errors appear on these reports.
A negative item on your credit report will negatively impact your credit score. If you come across any such marks that you believe are erroneous you need to contact the credit bureau in writing and inform them of the mistake. If you do not find any errors you may move on to step three.
In the third step, you're need to request more credit – either from your existing creditors or open a new account or two that are free of annual fees. Now I am not recommending that you go out and make charges with the newly discovered credit. Instead, you will change the data in the formula which is used to ascertain your credit report. Part of the data that are run to produce this score are based on your ratio of debt-to-credit.
For example, if you only own one credit card that has, let's say, a $ 1000, limit and you're carrying, let's say, $ 496 in debt, the debt-to-credit ratio would be about .5. We're going to want to lower that. Let say that you open another four accounts and each grant you $ 1000 of credit. If you maintained a balance of $ 1 on each you'd effectively lower your ratio to .2.