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Eight Ways to Raise Your Credit Score


Did you know that paying a collection account can actually reduce your score? Here’s why: credit scoring software reviews credit reports for each account's date of last activity to determine the impact it will have on the overall credit score. When payment is made on a collection account, collection agencies update credit bureaus to reflect the account status as "Paid Collection". When this happens, the date of last activity becomes more recent. Since the guideline for credit scoring software considers the date of last activity, recent payment on a collection account damages the credit score more severely.

This method of credit scoring may seem unfair, but paying an old debt does not erase the fact that at one time you were not paying it as you agreed.

If you have a collection on your credit report, you may contact the collection agency directly to suggest a Pay for Deletion. Explain that you are willing to pay off the collection account under the condition that the account is withdrawn from credit bureaus. Then, request a letter from the collector that explicitly states their agreement to delete the account upon receipt/clearance of your payment. Although the credit repair process may take considerable amount of efforts, the removing of all references to a collection account will increase your score.

If the collection agency refuses to delete the account from the credit bureaus, you may decide to settle for less. But a "Paid" collection mark on your credit report is still viewed as evidence of a weak commitment toward meeting your obligations. However, its impact on your credit score gradually declines with the passage of time.


Credit score software penalizes you for keeping past due accounts. So make sure you keep all your bills current by paying off any past due accounts.  


Charge-offs and liens barely affect your credit score when older than 24 months. Therefore, paying an older charge-off or a lien will neither help nor damage your credit score. However, charge¬-offs and liens within the past 24 months severely damage your credit score. Paying the past due balance, in this case, is very important. In fact, if you have both charged-off accounts and collection accounts, but limited funds available, pay the past due balances first, then pay collection agencies that have agree to remove all references to credit bureaus.


Creditors look at your credit history to see how you've managed your current and past credit obligation in an effort to predict how likely you are to miss payments in the future.  The most powerful predictor of the future late payments is having missed payments in the past. Contact all creditors that report late payments on your credit and request a good faith adjustment. Be persistent if they refuse to remove the late payments at first, and remind them that you have been a valued customer. Since most creditors receive calls within a call center, if the representative refuses to make a courtesy adjustment on your account, call back and try again with someone else. Persistence and politeness pays off in this scenario. If you are frustrated, rude, and unclear with your request, you are making it very difficult for them to help you.


Make sure creditors report your credit limits to the credit bureaus. Some lenders deliberately withhold information on timely payments and maximum credit lines to prevent a customer’s credit score from rising. When no limit is reported, credit scoring software scores the account balance as being "maxed out". Credit scoring software likes to see you carry credit card balances as close to zero as possible. High credit utilization will lower your credit score.

If it is difficult for you to pay down your balances, read the following guidelines to maximize your score as much as possible under the circumstances:

     >> Balances over 70% of your total credit limit on any card damages your score the most. For example, if you have an open credit card with a $2,000 credit limit and a balance of $1,000, then your utilization rate is 50%.  But if you open a second card with a $2,000 credit limit and a $0 balance, then your aggregate revolving utilization is 25%, which is a better scenario for credit reporting purpose, because you have $4000 in credit limits and $1,000 in balances ($1000 divided by $4,000 is .25 or 25% debt-to-credit ratio).

     >> In order to maximize your score without having to pay down your balances, evenly distribute your credit card balances among all of your credit cards, rather than carry a large balance on one credit card. For example, if you are carrying a $9000 balance on a credit card with a $10000 limit, and you have two other credit cards with a $3000 and $5000 limit and 0 balance, transfer the balance of the $9,000 card to the other 2 cards so that you have a $1500 balance on the $3000 limit card, a $2500 balance on the $5000 limit card and a $5000 balance on the $10000 limit card. Evenly distributing your balances will maximize your score.


Closing a credit card can hurt your credit score, since doing so affects your debt to available credit ratio. For example, if you have 2 credit cards with a total debt of $12,000 and you have $20,000 credit limit, you are using 60% of your total credit. If you close one credit card with a $4,000 credit limit, you will reduce your available credit to $16,000 and change your ratio to 675% ($12,000/$16,000) which will damage your credit score.

Also, it is important to note that the ideal number of credit card accounts to have in order to maximize your score is between 3 and 5. If a card was opened within the past two years and you have over six credit cards, you may close that account. If you have more than six department store cards, close the newest accounts. Otherwise, do not close any at all.

A mixture of credit cards and installment loans, loans with fixed payments, can help raise your score if you manage the credit cards responsibly.


Most business credit cards do not report to the personal credit report unless the person pays the card late. Given that fact, any debt carried on these cards does not hurt the credit score if it is not reported. You can carry credit card debt on these cards without hurting your credit score. 


15% of your credit score is determined by the age of the credit file. Fair Isaac's credit scoring software assumes people who have had credit for a longer time are at less risk of defaulting on payments. Therefore, even if your old credit cards have horrible interest rates, closing those cards will decrease the average length of time you’ve had credit. Use the old card at least once every six months to avoid the account rating to change to "Inactive". Keeping the card active is as simple as pumping gas or purchasing groceries every few months, then paying the balance down or in full once the bill becomes available. An inactive account is ignored by Fair Isaac's credit scoring software (inactive cards do not generate any revenues for the credit card companies since you are seen as a liability and not an asset), so you won’t get the benefit of the positive payment history and low balance that card may carry. The one thing all credit reports with scores over 800 have in common is a credit card that is twenty years old or older. Hold onto those old cards, trust me!

Repairing credit is a slow and time consuming process. Full knowledge of your credit profile and what your debt represents to creditors and credit bureaus is pivotal to full credit restoration success.