Instead of simply throwing money into buying your credit scores or paying for some ongoing monitoring service to which you may not give much attention, take an interest in improving your credit standing and score. Working to boost your credit rating is especially worthwhile if you know that your credit report contains detrimental information. Here are the most important actions that you can take to boost your attractiveness to lenders: Get both of your credit reports, and be sure each is accurate.
Correct errors (as we explain in the next section), and be especially sure to get accounts removed from your credit report if they aren’t yours and show late payments or are in collection. Ask to have any late or missed payments that are more than seven years old removed. Ditto for a bankruptcy that occurred more than ten years ago.
Pay all your bills on time. To ensure on-time payments, sign up for automatic bill payment, a service that most companies (like phone and utility providers) offer.
You can also arrange to have your credit-card bill automatically paid off in full every month. Just be sure to take the time to review your statements before the payment date. Be loyal if it doesn’t cost you. The older your open loan accounts are, the better your credit rating will be. Closing old accounts and opening a bunch of new ones generally lowers your credit score. But don’t be loyal if it costs you! For example, if you can refinance your mortgage and save some money, by all means do so.
The same logic applies if you’re carrying credit-card debt at a high interest rate and you want to transfer that balance to a lower-rate card. If your current credit-card provider refuses to match a lower rate you find elsewhere, move your balance and save yourself some money (see Chapter 5 for details). Limit your debt and debt accounts. The more loans, especially consumer loans, that you hold, and the higher the balances, the lower your credit score will be. Work to pay down consumer revolving debt (such as credit-card debt). Turn to Chapters 5 and 6 for suggestions.