The Financial Five: Ways To Improve Your Credit Score

Do you ever think about how many numbers you know by heart? Your phone number, your social security number, your online banking password, zip codes, pins, etc. However, there is one number that is just as important that many consumers do not know by heart - - your credit score. Credit scores are used by lenders to determine your credit worthiness. They are the Facebook of lending, identifying your past and current borrowing history and generating a profile of your creditworthiness.

Here are five ways consumers can impact their credit score:

1. Obtain a credit card: Keep a credit card for minimal purchases that you can pay off monthly. If you do not qualify for a regular credit card, consider a secured credit card from a credit union, and look for a card that reports to all three credit bureaus.

2. Pay down existing debt: Paying off installment loans (i.e. mortgage, auto, and student loans) can help your scores, but not as dramatically as paying down, or paying off, credit cards. Lenders like to see a gap between the amount of credit used and available credit. Balances below 30% of the credit limit on each card can really help; balances below 10% are even better.

3. Increase your credit limit: Your score might be lower than it should if your lender is showing a lower credit limit than you have. The quickest way to correct this problem is to inquire through your lender. Ask them if they report your actual limit, and/or if your credit limit can be raised.

4. Ask for a "goodwill adjustment": It is a long shot, but if you are a good customer, lenders might agree to simply erase a late payment from your credit history. Most requests must be made in writing, and your chances for a "goodwill adjustment" improve the better your record with the company (and the better your credit in general). It doesn't hurt to ask.

5. Correct errors: Credit scores are calculated based on information in your credit report, so errors can really cost you. Not everything that is reported in your files matters to your scores. The information worth the effort to correct include late payments, charge-offs, and collections.

The Financial Five is a monthly consumer column from Ohio's Credit Unions that provides important financial tips to consumers.


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