Think of your credit score in the same way you’d think about the IRS; an unavoidable fact of life. Good or bad, credit scores are here to stay. As such, consumers can only benefit from learning how they can improve their credit score, especially when their score hits the skids.

Fortunately, consumers have tools that effectively improve one’s credit score.

Want to know the best part?

Consumers must recognize (and prepare) for an impending dilemma – the ever-increasing use of credit scoring as a primary risk-assessment tool within many industries. In fact, most industries already appreciate the inherent importance of a credit score and its intensely debated predictive value. This is the dilemma.

In the not too distant future, a credit score’s impact will penetrate many industries. Everyone knows that a credit score affects lending decisions; however, not everyone knows that the insurance industry has already created algorithms that use credit scores to determine approvals and rates.

Here’s the Deal

The ever-increasing use of credit scores as a basis for risk analysis should act as a neon warning sign for consumers. And therefore, it is becoming even more critical to maintain an acceptable credit score. This requires a unilateral focus on the part of the consumer.

We all make mistakes.

For the most part, those who have less than perfect credit scores fall into one of two categories. There are those who use credit irresponsibly or recklessly. This manifests as charge-offs, collection accounts and sometimes legal judgments.

Others, who have watched their scores plummet, have encountered difficult times or medical issues. Despite the cause of the poor credit, the tools and techniques noted below help all consumers with poor credit scores.

Credit Scoring Possibilities

There are a variety of credit-scoring models that generate credit scores. The most common include FICO and Vantage Score 3.0. Both algorithms create a credit score that falls within a range that begins with 300, on the shallow side, and caps off at 850. In general terms, credit falls into five categories.

  • Excellent – >+ 750
  • Good – 700 – 749
  • Fair – 650 – 699
  • Poor – 600 – 649
  • Bad – Any score which falls below 600

Note though, auto insurance companies using a credit score to determine creditworthiness and risk level can re-define what a good/bad credit profile is – for their purposes. In other words, what one company considers a ‘good’ credit score, another might deem ‘excellent.’ This only complicates the world of credit scoring.

Calculating a Credit Score

To understand how to apply techniques to improve your credit score, it is essential to understand what variables are used as its basis. For the most part, credit scoring algorithms use five across-the-board variables to determine a credit score.

  • A History of Payments – reflects 35% of a credit score
  • How Credit is Used – reflects 30% of a credit score
  • Credit History Length – reflects 15% of a credit score
  • A Mixture of Account types – reflects 10% of a credit score
  • Recent Credit Inquiries – reflects 10% of a credit score

Tools to Improve Credit Scores

A credit report is a collection of data regarding how a consumer manages their finances over time; including detailed payment history.

Given the fact that credit scores are based upon the data in your credit profile, logic dictates that the most effective way to manage your credit score would be to control the contents of your credit profile. If you want to repair your credit profile, and thus your score, try these techniques.

Review Your Current Credit Report

Each of the three major credit repositories must, by law provide consumers with a free credit report on an annual basis. Consumers can obtain their free credit report by contacting the three credit bureaus directly:

  1. Equifax
  2. Experian 
  3. TransUnion

Note that the Federal Trade Commission (FTC) advises consumers to request their free credit report from – a federally approved provider.

Once you receive your credit report, review it carefully to determine if there are any errors. This is critical because the FTC has conducted congressionally-requested studies that reveal the following:

  • 1 of 5 consumers had an error on the credit report from one of the three major credit repositories
  • 1 of 4 consumers had errors that might impact their credit score
  • 4 of 5 consumers who disputed a credit report error, received some form of a revision to their report

What’s the Bottom Line?

Consumers can make changes to their credit score. They are advised to monitor their credit report regularly to avoid earning a credit score that does not appropriately reflect their creditworthiness.

Look for Common Reporting Errors

Once received, review your credit report to determine if it contains any erroneous information.

These are the most common reporting errors:

• Balance Errors – incorrect credit limits or balances, etc.
• Identity Errors – misspelled names, wrong addresses, accounts opened due to identity theft
• Reporting Errors – accounts reported as open when closed; double debt, or inaccurate late payments and charge-offs

Learn to Dispute Errors

If you have found inaccurate information on your credit report, contact the credit bureau immediately to dispute these errors. These are the links for each credit bureaus dispute protocols:


Consumers remain responsible for disproving erroneous information. Yes, this appears unfair.

Some companies specialize in credit repair. Be careful, as some may be credit repair scams. Request all promises made by the credit repair company be outlined in writing. It is simply foolish to waste money on a scam when these funds could be used to pay down balances or to create an emergency fund.

Implement a Payment Strategy

Late payments and delinquent payments impact your credit score significantly – about 35% of it. For the most part, delinquencies remain a part of your credit history for seven years. Follow these techniques to help improve your credit score.

  1. Pay financial obligations on time.
  2. Outstanding accounts that have not hit collection should be paid off when possible. A one or two-month delinquency does a lot less damage than three or four months late payment.
  3. Improve your credit utilization – don’t modify credit arrangements (i.e. don’t open or close any accounts) and make sure your account balances stay clear of the account limit.
  4. Avoid credit inquiries, if possible.

Don’t Give Up. Educate Yourself.

Credit information and advice are available all over the Internet. This is a great way to begin to learn of the many ways to improve your credit score both legitimately and quickly. Consumers are encouraged to visit official information websites like the Federal Trade Commission or the Consumer Financial Protection Bureau for more in-depth knowledge.

The Bottom-Line

Credit scores are dynamic. They change as the data they depend upon changes. The tools discussed above can legitimately improve your credit. For most of us, the challenge is remaining patient, focused and self-directed. This is a worthy challenge to overcome.

The fact is, it appears we have become our credit score or, is it that our credit score has become us? Either way, maintaining a good/excellent credit score reaps many financial rewards.

Follow Nike’s great advice, Just Do it!

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