How can you improve your credit score?

First, take advantage of your legal right to a free credit report each year from each of the three credit repositories. You can access these reports at www.annualcreditreport.com . You should then dispute any erroneous information in the reports immediately. Although you will be required to pay between $5 and $10 per bureau, you should take the opportunity to obtain your credit scores at the same time you request your free reports. That will give you a baseline to determine what steps, if any, you can take to improve your score. Your scores will not be impacted by your request for your own scores. These scores are "consumer scores" and may be different (in my experience by up to 20 points) from the mortgage-specific scoring system used in support of mortgage loans.

Scores are determined by the obvious: timely payment of debts, and a reasonable amount  of outstanding consumer debt (not too little, not too much, just about right); as well as many factors which may not be as obvious: length of time accounts have been open, number of credit inquiries made by third parties (including employers, landlords, etc.), and the amount of peak credit card balances relative to credit card limits even if you pay the balance to zero each month! The top causes for unexpectedly low scores are high apparent credit card balances (often business travel expenses, or using cards for all expenses to accrue mileage awards, resulting in monthly usage in excess of 50% of the limit), and relatively small collection accounts (often resulting from medical accounts) which can remain for 7 years with significant scoring impact. Strategies include increasing your credit card limits to at least twice monthly usage, and rigorous avoidance of medical late payments (even if your health insurance liable for payment of the balance).

We would be happy to review your credit report, or one we request on your behalf (at a cost of less than $25 including credit scores for all three bureaus), to recommend a plan for improving your scores. If your score is above 740, a higher score will have minimal, if any, impact on loan approval or pricing, so it is likely that no effort is warranted, other than to correct any obvious inaccuracies.

In the event that erroneous information is causing low scores, we have a system for correcting the errors, and your score, at the agency source within 72 hours.

An interesting website with some informative and often contrarian educational content is www.creditscoring.com .

Low credit scores, even with no derogatory payment history, can easily cost a borrower thousands of dollars in higher interest costs. The credit reporting system can be a formidable and frustrating bureaucratic adversary, thus vigilance regarding one's credit information is well worth the effort.

"A lie can be halfway round the world before the truth gets its pants on." - Winston Churchill