Managing a credit score

Few financial figures are as important as a credit score.

The three-digit figure has a major impact on daily life – dictating what consumers can buy, how much credit they can obtain and even where they choose to reside, reports Take Charge America, a non-profit credit counseling agency.

A credit score is an estimate of credit risk, which is based on a consumer’s credit report. Lenders use this number to determine how likely applicants will be to repay a loan or line of credit in a timely manner.

The higher the score, the better interest rate they’ll receive.

“Credit scores matter whether your credit history is pristine, new or needs some work,” said Mike Sullivan, chief education officer for Take Charge America. “Improving your score requires a regular effort. You need to continually be mindful of your purchases and your payments.”

Sullivan offers five do’s and don’ts for managing a credit score and maintaining a positive credit history:

– Don’t Miss Credit Card Payment Due Dates: Credit card companies set deadlines in stone. Missing just one payment – even by a day or two – can negatively impact your credit score. On the flip side, a history of on-time payments can help improve your credit score.

– Do Pay More than the Minimum Amount Due: Submitting minimum payments can be a very slow way to pick away at your credit card debt. Bigger payments can make a big impact on your total debt level, plus they can help raise that score.

– Don’t Apply for New Credit: If you are trying to improve your credit, applying for new credit could not only lower your score, but you’re more likely to get higher interest rates on the loan or line of credit.

– Do Decrease the Total Amount of Debt Owed: Paying down your total debt, including credit cards and other personal loans, is among the fastest ways to improve your credit score.

– Don’t Close Old Credit Card Accounts: Closing a credit card can lower your credit score – especially if it’s been open for more than three years – because it reduces your credit-to-debt ratio, a major factor credit bureaus use to determine your score. If you want to remove the temptation to spend, consider cutting or storing the card while keeping the account open.

To keep tabs on credit history and ensure the data is correct, Sullivan recommends consumers check their credit reports at least once a year.

A free credit report can be obtained annually from each of three credit bureaus.

The three nationwide consumer reporting companies have set up a central website, a toll-free telephone number, and a mailing address through which you can order your free annual report.

To order, visit, call 1-877-322-8228. Or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.

It’s common for the score to vary slightly with each bureau.

Area residents also need to be aware of companies promising to improve credit scores.

Every day, companies target consumers who have poor credit histories with promises to clean up their credit report so they can get a car loan, a home mortgage, insurance, or even a job once they pay a fee for the service.

The truth is, these companies can’t deliver an improved credit report for you using the tactics they promote. It’s illegal: No one can remove accurate negative information from your credit report. So after you pay them hundreds or thousands of dollars in fees, you’re left with the same credit report – and someone else has your money.

If you see a credit repair offer, here’s how to tell if the company behind it is up to no good:

– The company wants you to pay for credit repair services before they provide any services. Under the Credit Repair Organization Act, credit repair companies can not require you to pay until they have completed the services they have promised.

– The company doesn’t tell you your rights and what you can do for yourself for free.

– The company recommends that you do not contact any of the three major national credit reporting companies directly.

– The company tells you they can get rid of most or all of the negative credit information in your credit report, even if that information is accurate and current.

– The company suggests that you try to invent a “new” credit identity – and then, a new credit report – by applying for an Employer Identification Number to use instead of your Social Security Number.

– The company advises you to dispute all of the information in your credit report, regardless of its accuracy or timeliness.

Residents should note that it is a federal crime to lie on a loan or credit application, to misrepresent your Social Security Number, or to obtain an Employer Identification Number from the Internal Revenue Service under false pretenses.

To learn how to improve your credit worthiness and find legitimate resources for low or no-cost help, see Credit Repair: How To Help Yourself at