10 Easy Ways to Raise Your Credit Score

Is it 567? Is it 432? A perfect score is 850, but what exactly does that mean?

This mystifying number sticks with us through life, following wherever we go. Yet, most consumers have little to no idea how a credit score is achieved, let alone how to improve their score.

According to the Fair Isaac Corporation (FICO,) five factors are considered when calculating a credit score: payment history, length of credit history, new credit, types of credit used, and amounts owed. Your score depends upon how well you handle these areas over time.

So how do you best manage these areas and lift your score? Follow these ten easy steps and you will soon be close to the top of the credit score heap.

Request a copy of your credit report. Visit the Annual Credit Report website https://www.annualcreditreport.com to obtain your credit report for free, once every 12 months from each of the nationwide consumer credit reporting companies: Equifax, Experian and TransUnion.

Addressaccounts that do not belong to you. If you spot an account on your record that you know does not belong to you, act immediately! Visit the FTC National Resource for Identity Theft http://www.consumer.gov/idtheft to find out how to handle the matter, or utilize information provided on the reporting company's website.

Resolve past due accounts and collection activities. If you have a past due account, remedy the account as quickly as possible to clear up this ding against your credit rating. If you have collections activity, verify that it's legitimate, remedy the account, or if it is not legitimate, work with the credit reporting agency to remove the information. You can also add a notion/explanation on your report regarding the circumstances/nature of why the debt remains outstanding.

Manage Unused Credit Cards. It may be tempting to close all your latent credit card accounts at once, but doing so can actually cause concern with potential lenders. Instead, close the accounts over a period of time, such as closing one per month.

Address open accounts that should be closed. If you've closed a credit card account or loan account and it still appears in active status on your credit report, work with the company to change the status of the account. Carrying excessive debt can affect your crediting rating negatively, so it's best to ensure debt that is paid in full or closed not be counted against you.

Balance your credit card debt. When your credit blance is close to your credit limit, it lowers your score. Establish a goal to have 50% of your credit limit or less charged on any credit card you own, at all times.

Weigh your options before opening new accounts. If you already have a healthy credit history and score, opening a new account may have an adverse affect on your score. If you are attempting to increase your available credit or establish a better credit history, go easy on the number of accounts you open. Rapid account buildup may lower your credit score and appear risky to lenders.

Avoid moving your credit around. It may be tempting to consider the new zero percent credit card offer you recently received in the mail, but opening the extra account may lower your credit score. In addition, read the fine print on the offers, often there are hidden charges and penalties that could wind up costing you more in the long run.

Re-establish your credit. If you've had difficulties making payments or other credit blemishes in the past, be extra contientious about staying current with your bills and keeping your debt obligations low. If you are unable to obtain credit, consider opening a secured credit card to re-establish good credit.

Manage your credit responsibly. Pay your bills on time. Resist excessive charging. Carefully weigh offers and shop around for the best credit offers, when needed. It's the simple steps that will carry a lot of weight on raising your credit score over time.