A FICO score is a type of credit used to assess the “risk” of lending to someone. A base FICO score ranges from 300 – 850 and takes into account payment history, debts, and credit history, along with other factors.

There are definite benefits to increasing your score over time. Banks and credit unions could offer better interest rates on a home mortgage if they see you have a higher-than-average score. This is why it’s smart to check your credit report annually for errors and issues that may be costing you a higher number:

  • Bankruptcy
  • Liens
  • Late payments
  • Foreclosures
  • Accounts in collections
  • Repossessions
  • Judgments

If you’re building or rebuilding your credit score after a recent fallout, it does take time, but it’s worth the effort. Get started using these steps:

  • If you see any errors at all on your report, even something as small as a misspelling, dispute it! An important part of increasing your score is making sure your information is correct and that there are no cases of fraud or identity theft.
  • Pay down credit card balances as much as you can. If possible, don’t make any new purchases on the credit card. Put that plastic on ice!
  • Certain banks and financial institutions have special credit-building loans that can build up your history without buying into higher-interest rate loans.
  • Moving forward, make sure to pay every single bill on time, even non-credit bills. Missed rent and utility checks can still get reported and brought to credit bureaus.
  • If possible, don’t close any accounts, even if you’ve paid them down. You still need a long credit history to be able to sustain a good score.
  • Talk to your creditor. If you’ve had a small slip-up with a late payment, sometimes you can get it waived just by asking. This works best if you have a legitimate reason for being late and you’re upfront right away about the issue.

Finally, practice good spending habits! While it won’t happen overnight, living within your means on a long term basis means you’re investing in your financial future. Your FICO score will thank you.

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