Know Your Starting Point
Obtain a copy of your credit report from all three credit bureaus so you have a clear understanding of your current credit scores. If there are errors on your credit report, have the credit bureaus investigate and correct them.
Develop a Plan
Set goals and timeframes for future major expenses, such as applying for a mortgage, or making another kind of large purchase. Every time you open a loan account or credit card, an alert is placed on your credit rating for a certain period of time, depending on the amount and circumstances. Space your larger expenses apart, if possible.
Build a Positive History
The lower your credit score number, the more your need to have positive item reporting. If you don’t have any open credit, you need to have new positive items reported on your credit report. Try to make your payments on time, or obtain a new account or a secured credit card.
Keep Older Accounts Open
If you have credit open, don’t close those accounts. Keep the accounts you have had for the longest period of time, especially. Even if there were late payments on it in the past, pay it on time now. The length of time it has been open will help your credit score.
Make Your Payments on Time
This is the single best piece of credit advice, and it bears true. Even if you can’t pay off the total, pay what you can on time.
Pay Down Your Credit Balance
Try to keep the total amount of outstanding revolving debt at 40% or less of your total available credit limit.
Study Your History
If you are considering a home purchase or refinance, any old collections, judgments, unpaid taxes, or unpaid child support must be cleared up. Look at the date of each old item and plan a strategy to address each. Once they are all paid off or cleared off your record, your credit will reflect your progress.
Tools to Help You
You can analyze your financial health with SavvyMoney. SavvyMoney is a free, anonymous, easy-to-use online tool. It offers recommended debt payment schedules and strategies to keep your finances in balance. In addition, your credit union offers BALANCE Financial Fitness Program, a comprehensive financial education and counseling service. BALANCE counselors are experts in all aspects of personal finance and credit.