Step 2: Review Credit Report for Errors
One of the easiest ways to improve your credit score is to fix errors on your credit report. Here are some of the common credit report errors to look for:
- Incorrect street address
- Incorrect name (look out for a similar name or suffix being reported on your report)
- Fraudulent accounts, otherwise known as accounts that you didn’t open. Beware, as this could be identity theft.
- Incorrect account information such as:
- Inaccurate credit limits
- The wrong origination date on a loan
- Wrong Social Security Number
- Wrong birth date
- Spouse’s information is inaccurate
- Accounts that are mistakenly shown as being open or closed. Look to see if there’s a notation on the account saying if you or the creditor closed the account (and if that’s accurate).
- Wrong payment status information
Step 3: Dispute Credit Report Errors
Once you’ve reviewed your credit report for errors, next you’ll want to dispute those errors with the credit bureaus. You can do this using a letter (like this sample from the FTC), or you can dispute them online through each of the three credit bureaus. In both scenarios, you’ll want to point out the errors, and state why the information is inaccurate, then request that the items be fixed and/or removed.
It’s a good idea to send a copy of your credit report and, if you are disputing by mail, send it via certified mail. If you prefer to dispute your credit errors online, use the links below for each of the three credit bureau’s pages with information on their process:
After you file a dispute, be diligent and follow up to make sure it was resolved.
Step 4: Lower Debt
Your debt-to-credit (DTC) ratio refers to percentage of your income that goes toward paying your debt each month. Keeping a lower debt-to-credit ratio can help improve your credit score. Lenders want to make sure that you’re living within your means before they allow you to take on more debt.
Strategies for lowering your DTC is to pay down your current debt and get an increase on your credit limit, without utilizing it. Racking up big balances can hurt your scores, regardless of whether you pay your bills in full each month. You often can increase your scores by limiting your charges to 30% or less of a card's limit.
Step 5: Set up Automatic Payments
The most important factor in credit worthiness, 35% of your credit score, is your ability to pay bills on time. Utilize Coastal’s Online or Mobile Banking to set up recurring payments for bills that are the same each month to make sure those are always paid on time – especially your credit cards and loans. Use Bill Pay to set up a payment each month for at least the minimum balance to ensure payments are made on time.
Be Careful with New Credit
Another factor that makes up your credit score is any new credit. Be cautious the next time a retailer offers you 10% off and double points if you open a store credit card. If you need a new line of credit, don’t jump at the first appealing offer; compare rates and fees and options.
Talk to Credit Counselors if You’re in Trouble
Using a legitimate, non-profit credit counseling agency can help you manage your debt and won’t hurt your credit score. For more information on debt management, contact the National Foundation for Consumer Credit.
Fixing Bad Credit is Worth the Effort
Improving your credit score takes time, but with some effort and planning, it can help you qualify for a mortgage or get a lower interest rate on your credit card. Want to talk to someone in person about your credit? Visit one of our locations or contact us.