Five Ways to Improve, Build, or Maintain Good Credit Scores

I was going to name this article “The Five Best Ways to Improve Your Credit Scores,” but there are simply too many articles floating around that profess to have the “best” strategies.  So, I decided that I’d just share what I know to be five ways to improve, build, or maintain good credit scores.  Some will work for you; some won’t.  Some will make a big difference for you, and some won’t.  Enjoy! 

1.  Think About Opening Another Credit Card – Even in this credit environment there are still plenty of credit card issuers doing business and issuing credit cards.  And as I always say, there’s a time to reap and a time to sow.  Now is the time to sow.  Take this opportunity to open at least one more new credit card.  That will ensure that your revolving utilization is at least as good as it is today and likely much better tomorrow.  Use the card now and then to keep the issuer happy or use it to replace the activity reserved for another card.  All in all, this is a great long-term strategy.

2.  Perform Your Annual Credit Diagnostic – If you haven’t claimed your free credit reports from the four credit bureaus yet this year, do it this week.  You can get three of them at Annualcreditreport.com and the fourth from Innovis.  Confused?  Don’t be.  There are actually more than three credit bureaus, many more.  But the only additional bureau that you need to be concerned with is Innovis Data Solutions.  You can get your Innovis credit report by calling 1-800-540-2505.  If you find ANYTHING that is incorrect and negative, take the time to challenge it and get it corrected.  Innovis doesn’t sell FICO scores to lenders, but it’s still important to make sure they maintain an accurate credit record for you.

3.  Search out FICO 08 – FICO 08 is the newest FICO score, now available at all three bureaus.  For those of you who have good credit scores, your FICO 08 score will likely be higher.  For those of you who have lower scores because of isolated negative incidents, your FICO 08 score will also likely be higher.  Start talking to lenders about what version of FICO they’re using. If you really want to max it out, you’re better off doing business with a lender who uses the new FICO 08 score.

4.  Plan Ahead For the CARD Act – This one is for the millions of 18-year-olds who are starting college this fall.  Be aware that beginning in February 2010 the CARD Act will make it more difficult for you to open a credit card.  This stalls your entry into the credit market and puts you behind everyone else who has already started to build a credit report and credit scores.  So, if you’re over 18 and ready to start building credit, it’s a good idea to pull the trigger before February 2010.  After this date, you’ll need a co-signer or a job.

5.  Think Twice About Loan Modifications – As I pointed out in this article, modifying your home loan, which is going to become more common, will likely lower your credit scores.  So, if maintaining good credit is more important than modifying the terms of your home loan, BEWARE!!   

John Ulzheimer – Credit scoring and credit reporting expert and author, John is the President of Consumer Education for Credit.com. Formerly with Equifax and Fair Isaac, John shares his unique insight of the inner workings of credit scoring models and the credit reporting industry on CreditBloggers.com.