Your credit score gives potential lenders an indication of your payment patterns and how well you manage your debts. A low credit score is a sign that you are a credit risk, making it difficult for you to get credit. Old debts on your credit report can drag down your credit scores. However, you can raise your credit score without having to pay your old debts.
Check your credit. Get a copy of your credit report from all three credit reporting bureaus. You can request one online from their websites or phone in your request. Once you receive your reports, review them carefully for any errors or accounts you do not recognize as yours. Notify the agencies immediately if you suspect any of your personal information has been used for fraudulent purposes.
Let old debts remain unpaid. Collection accounts remain on your credit report for seven years. Paying them will not remove them and may even re-age them, lengthening the time they remain on your report. If you notice unpaid accounts that have been on your credit report longer than seven years, file a dispute with the credit reporting agencies on the basis that they are old.
Maintain timely payments on your current bills. Your credit score will increase as long as you continue paying your bills on time, despite your late payment history. Getting and staying current on your bills is a sign that you have gotten a handle on your situation and are managing your debt well. Over time, your good payment history will outweigh your past credit problems.
Keep low credit balances. A high debt to income ratio affects your credit score and makes creditors leery of extending you credit. It is better to pay down your debt and have fewer open accounts than numerous accounts on which you are just paying the minimum.
Keep barely-used credit accounts open and do not get more credit than you need. The longer a credit line remains on your credit report in good standing, the higher your credit score. Open new accounts responsibly. Do not open new accounts just to increase your available credit. You run the risk of having more credit card bills than you can comfortably manage. Each credit application results in a hard inquiry on your credit report. Too many inquiries tells lenders that you may be trying to get more credit than you can handle.
Contact your creditors if you are having a problem. Most creditors are willing to work out payment arrangements to prevent your accounts from being reported as late or going into collections. Seek credit counseling help if necessary.
- MyFico: How to Repair Your Credit and Improve Your FICO Credit Score
- Experian: Improve Your Credit Score: Find Out What You Can Do and How Long it Takes
- Experian. "What Is a Credit Utilization Rate?" Accessed June 24, 2020.
- Consumer Financial Protection Bureau. "How Long Does Negative Information Remain on My Credit Report?" Accessed June 24, 2020.
Connie Peete is a writer specializing in personal finance and health topics. She holds an associate's degree in secretarial science and information processing from the Bryant & Stratton Business Institute.