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Following are several tips for improving credit scores:

  1. Obtain a complete copy of your credit report AND scores from all three credit bureaus (Transunion, Equifax and Experian). Once you have the credit report, review it in detail to identify errors and inaccuracies.
  2. If any errors or inaccuracies are noted, contact the credit bureau and the specific creditor to report any errors or inaccuracies and aggressively pursue having all errors removed and inaccuracies corrected. If there are extensive errors or inaccuracies consider working with a credit repair firm which should have the expertise to help have you.
  3. Any outstanding judgments or liens should be satisfied or settled as soon a possible. Collections and charge-offs may or may not require attention so consult with a qualified mortgage professional.
  4. Manage your credit utilization rate for each account since this one factor is the second most important factor (behind making payments on time) that impacts your credit score. The credit utilization rate refers to how much of the available credit limit on an account has been used/charged. For example, if you have a credit card with a $1,000 limit and an outstanding balance of $500, the credit utilization rate on the account is 50%. Once the credit utilization rate exceeds 30% your scores will decline, when it exceeds 50% your scores decline again, when it exceeds 80% the scores will decline again. Paying down the balances below each of these thresholds will improve your credit scores.
  5. Make sure that you have enough accounts and credit history. When applying for a mortgage, many banks will require 3 open accounts that have a 12 month payment history. It is possible to have a mortgage loan approved with less than three current accounts or a history of less than 12 months. However, the lack of adequate accounts or history could require additional steps to be taken in order for the mortgage loan to be approved.

One last tip is to review your credit report and scores at least once a year and if possible twice a year (every 6 months). Alternatively, some type of credit monitoring service that will alert you anytime there is a significant change in your credit report such as a new account or derogatory entry can be utilized. Your goal is to know exactly what is on your credit report and know if something happens that requires your attention.

If you do these five things and proactively take control of monitoring and managing your credit scores, you will be well on your way to having excellent credit and excellent credit scores. Of course paying your bills on-time will help a lot as well.