Ask the Experts: How do I raise my credit score?
I need helping raising my credit score. I haven’t had a credit card in many years (5-8 years) and as a teen I really didn’t know how important a credit score is. Also, I believe my Social Security number was stolen about 5 years ago when someone broke into my car. There’s an active credit card, opened in another state, on my credit report and of course it isn’t mine. Plus, there are some things I was late or paid off in collections when I was a teen that still seem to be on there and I don’t know how to go about clearing that and raising my credit score. I would greatly appreciate any help you can give me. –Patty
I’m sorry you’ve had such a rough time with credit so far. Unfortunately, you’re not alone. Lots of young adults aren’t taught how to smartly and successfully use credit, leading to many of the same issues you’re facing now.
First thing first – since you specifically asked about raising your credit score – you need to know that no action or activity can guarantee an increase in your score. No one can or should ever tell you “If you do X your score will increase by 50 points.” It doesn’t work that way. The best we can do is to use our understanding of how credit scoring works to make smart decisions that will positively impact our credit history.
It looks like you have three main issues to address: your compromised identity, past negative marks on your credit report, and things you can do going forward to prove your creditworthiness to future lenders.
Clearing identity theft
Hopefully you reported your break-in five years ago. Anytime something like that happens you want to contact the police. They might not be able to retrieve your stolen goods, but the police report is important in the case of potential identity theft.
Contact the creditor who is showing an open account in your name that isn’t valid. They may request a copy of the police report to help clear you of all charges and activity related to that account. Also, you’ll want to contact all three major credit reporting agencies and put a fraud alert on your account. That will prevent any new lines of credit from being opened in your name fraudulently.
Unfortunately, if your identity has been compromised, it can be a long and difficult process to clear your name. The sooner you start, the better.
Negative marks on your credit report
You need to understand that most negative marks – specifically missed payments, delinquent accounts, and charge offs (where a collection agency takes control of an unpaid account) – will stay on your report for seven years. Even if you brought your accounts current or paid off your collection accounts, the negative mark stays on your report for seven years. The good news is that the negative impact lessens over time, so a missed payment from five years ago should hurt you much less than a missed payment five months ago.
If you believe that negative items are being reported in error or that you’re past the seven year mark, you should contact the credit reporting agency and advise them of the error. They’ll review and remove the item if it’s proven to be in error.
Building healthy credit
While you’re addressing past issues you can start working on building up a positive credit history and the best way to prove that you’re creditworthy is to simply use credit wisely over a long period of time. Remember, the primary purpose of a credit report is to help potential lenders decide whether or not it’s a good idea to lend you money. So using borrowed money smartly – making on-time payments, never overdrawing your accounts – shows other lenders that you can be trusted.
There’s a lot more you can do to build a positive credit history. Check out our new eBook Getting the Credit You Deserve to learn all you need to know about how credit reports work and what you can do to make the most of yours.