FICO scores, based on your credit file, range from 300 to a perfect 850. Nowadays, consumers with a score below 650 or 700 may be charged higher interest rates, or may not be able to borrow at all. You can get your free report once a year at www.annualcreditreport.com. Once you know your score, here are some tips to raise the number:
Pay your bills on time. It sounds obvious, but any late payments have a major affect. Raise your score 20 points just by paying bills on time for two to three months.
Keep low credit card balances. It's better to have three cards with balances at 25% of the limit than one with a high balance. Maxing out a card can lower your score by 70 points.
Don't open new accounts you don't need. Each new account lowers your average account age, and lowers your score.
Have credit cards, but use them carefully. Someone with no credit cards is considered an unknown risk.
Closing an account isn't the answer. At least four active accounts gets you the best score.
If you see a mistake, challenge it quickly. Check for fraud and errors, and notify all three credit bureaus right away.
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