In Smart Money, see ways to improve your credit score.


  • A credit score is a statistical measure of the likelihood that a person will repay debts in a timely manner.
  • The most common metric is the FICO® created by Fair Isaac Corporation.
  • FICO® scores range from 300 to 850, with a higher value being more favorable.
  • FICO® scores are determined using five categories of data.
    • Payment history (approximately 35% of a FICO® score)
    • Amounts owed (approximately 30% of a FICO® score)
    • Length of credit history (approximately 15% of a FICO® score
    • o New credit (approximately 10% of a FICO® score)
    • Types of credit used (approximately 10% of a FICO® score)


  • Obtain copies of your credit report from each of the three main credit reporting agencies (TransUnion, Equifax and Experian) by visiting Be prepared to answer questions to verify your identity.
  • Read your credit reports carefully to identify inaccurate, outdated or incomplete information.
  • Look for late payments that may have been incorrectly reported.\
  • Verify the accuracy of the balances owed on current accounts.
  • Ensure that old accounts have been listed as closed.
  • Dispute errors with the credit bureau in writing.
    • Specifically explain which items you are disputing and why you are disputing the information.
    • Consider photocopying your credit report and circling the disputed items.
    • Inform the creditor in writing that you are disputing their information and provide supporting evidence.


  • Although late payments lower a person’s credit score, re-establishing a pattern of positive payments should impact your credit score favorably.
  • The impact of prior problems fades with the passage of time.
  • Recent activity impacts your credit score more than older activity.


  • DON’T rely on quick fixes; they may be more harmful than helpful.
  • DO develop a debt-reduction plan and stick to it!
  • DO specifically attack balances on revolving credit (e.g. credit cards).
  • DON’T simply transfer balances.
  • DON’T open several new accounts just to make more credit available.
  • DON’T open accounts too rapidly because this will reduce your average account age.
  • DO understand that closed accounts continue to be reported in your credit reports and may be factored into your score.
  • DON’T close a revolving credit account solely for the purpose of improving your credit score because this may actually increase your credit utilization ratio. However, DO close a revolving credit account if you have difficulty disciplining your spending and the account would entice you to spend beyond your budget.
  • DO ask creditors to report favorable history to the credit bureaus if they have not been doing this.

Courtesy: Chris Harper, Hungerford Nichols

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