What can I do to improve my score?
Credit scoring models are complex and often vary among creditors and for different
types of credit. If one factor changes, your score may change -- but improvement
generally depends on how that factor relates to other factors considered by
the model. Only the creditor can explain what might improve your score under
the particular model used to evaluate your credit application.
Nevertheless, scoring models generally evaluate the following types of information
in your credit report:
- Have you paid your bills on time? Payment history typically
is a significant factor. It is likely that your score will be affected negatively
if you have paid bills late, had an account referred to collections, or declared
bankruptcy, if that history is reflected on your credit report.
- What is your outstanding debt? Many scoring models evaluate
the amount of debt you have compared to your credit limits. If the amount
you owe is close to your credit limit, that is likely to have a negative effect
on your score.
- How long is your credit history? Generally, models consider
the length of your credit track record. An insufficient credit history may
have an effect on your score, but that can be offset by other factors, such
as timely payments and low balances.
- Have you applied for new credit recently? Many scoring
models consider whether you have applied for credit recently by looking at
"inquiries" on your credit report when you apply for credit. If
you have applied for too many new accounts recently, that may negatively affect
your score. However, not all inquiries are counted. Inquiries by creditors
who are monitoring your account or looking at credit reports to make "prescreened"
credit offers are not counted.
- How many and what types of credit accounts do you have?
Although it is generally good to have established credit accounts, too many
credit card accounts may have a negative effect on your score. In addition,
many models consider the type of credit accounts you have. For example, under
some scoring models, loans from finance companies may negatively affect your
Scoring models may be based on more than just information in your credit report.
For example, the model may consider information from your credit application
as well: your job or occupation, length of employment, or whether you own a
To improve your credit score under most models, concentrate on paying your
bills on time, paying down outstanding balances, and not taking on new debt.
It's likely to take some time to improve your score significantly.