An invisible number controls your financial destiny. So until the revolution, you might as well learn how to raise your credit score.
Step 1: Order credit score While you're asking for your credit reports, order your credit score—the number that creditors use to decide if they will lend you money. Cost is about $10.
Step 2: Request credit report Request a copy of your credit report from the three national credit bureaus—Experian, Equifax, and Transunion—by logging onto annualcreditreport.com or by calling 1-877-322-8228. You are entitled to one free copy of each annually.
TIP: Order your credit score from Equifax: It is the only agency that provides the actual number—called the FICO score—used by lenders.
Step 3: Review credit reports If your score is below 620, you are considered a poor risk. Carefully review your credit reports for any mistakes.
Step 4: Report errors If you find mistakes, or if you think you are the victim of identity theft, immediately report the errors to the credit reporting agencies listing them with any evidence you have, like cancelled checks to show you paid a credit card bill on time.
Step 5: Pay down debt Pay down as much debt as possible. It's the fastest way to raise your credit score.
TIP: Get the balance on each credit card down to 30 percent of your credit limit. Exceeding that lowers your score.
Step 6: Keep credit lines low Don't apply for unnecessary lines of credit, like store accounts that offer merchandise discounts. Every time you fill out a credit application, your score can be lowered.
TIP: Do not close older accounts. Having a credit history is important, even if your payment past is spotty.
Step 7: Negotiate w/ creditors Negotiate with creditors. Ask if there is any wiggle room regarding late fees and interest. Often, they will work with you to keep you as a customer.
Step 8: Stick to budget Once your debt is cleared up, stay out of trouble by preparing a budget and sticking to it.
FACT: In 2004, the average graduate student had six credit cards, with one in seven students owing more than $15,000.