This weekend on Marketplace Money, host Tess Vigeland interviews Chris Peplinski, a 37-year-old stay-at-home dad from Rogers, Ark. on a quest for the elusive 850 credit score. As of this week, he is at 816 and counting. Credit score expert Liz Pulliam Weston also weighs in on the topic with some facts on how to improve your credit score.
But we thought we’d go straight to the source for some more answers, and that’s FICO itself. On the FICO website you can find a hit list of things to do and NOT do to improve your credit score. Here’s a list of 10 tips that range from from common sense to good to know:
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Pay your bills on time. Delinquent payments and collections can have a major negative impact on your FICO score.
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Avoid the collection agency: Be aware that paying off a collection account will not remove it from your credit report. It will stay on your report for seven years.
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Keep balances low on credit cards and other “revolving credit.” High outstanding debt can affect a credit score.
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Pay off debt rather than moving it around. Owing the same amount but having fewer open accounts may lower your score.
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Don’t open a number of new credit cards that you don’t need, just to increase your available credit. This approach could backfire and actually lower your credit score.
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If you have been managing credit for a short time, don’t open a lot of new accounts too rapidly. New accounts will lower your average account age, which will have a larger effect on your score if you don’t have a lot of other credit information. Also, rapid account buildup can look risky if you are a new credit user.
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Do your rate shopping for a given loan within a focused period of time. FICO scores distinguish between a search for a single loan and a search for many new credit lines, in part by the length of time over which inquiries occur.
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Re-establish your credit history if you have had problems. Opening new accounts responsibly and paying them off on time will raise your credit score in the long term.
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Check your score regularly. It’s OK to request and check your own credit report. This won’t affect your score, as long as you order your credit report directly from the credit reporting agency or through an organization authorized to provide credit reports to consumers.
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Have credit cards. In general, having credit cards and installment loans (and paying timely payments) will raise your credit score. Someone with no credit cards, for example, tends to be higher risk than someone who has managed credit cards responsibly.
For more tips and resources about keeping your credit score on the up and up, visit FICO online.
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