1. Pay your bills on time
I know it may seem commonsense, but this needs to be mentioned. The most important step in improving your credit is paying your bills on time. A recent late payment can drop your score 60-100 points, so do yourself a favor and pay on time, every time.
2. Don’t Co-Sign for Anyone
It’s difficult to say no, especially to close friends and family. But if you’re going to improve your credit, you can’t risk someone else ruining all of your hard work. If your friend can’t qualify for a loan without a co-signer, maybe they should work on fixing their credit instead of putting your credit in jeopardy. Fixing your credit is all about taking control, you can’t control whether someone else is going to pay their bills or not, so don’t co-sign for anyone.
3. Keep Your Balances Low
Don’t let your credit card balances sink you. Paying them down doesn’t just make financial sense, but also improves your credit scores. 30% of your credit score is calculated from how well you manage your credit and your available utilization rates. So pay down your credit cards and watch your scores improve.
4. Limit Your Inquiries
Every time you apply for credit an inquiry shows up on your credit file. Applying too often lowers your credit score and makes you look desperate for credit. Limit yourself to one inquiry every 6 months.
5. Be Proactive
If you have derogatory accounts on your credit report, be proactive. Don’t sit around waiting for for 7-10 years for them to fall off your credit history. Get involved, contact the creditors, the credit bureaus, collection agencies, third party furnishers.
Investigate the information in your credit reports and get everything verified, validated, checked, re-checked.
Do some research, read a few books, learn about how the credit system functions, and most importantly learn your rights. You are protected by the FCRA, FACTA, FDCPA, CROA, and many other laws.
If you don’t have the time to do all of your own due diligence, hire a reputable company to represent you and fix your credit.