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Southtrust Law & Title Company:Range of Fico credit scores from very bad to excellent.

Simple Ways to Improve Your Credit Score

If you are someone looking to build or improve their credit score, you already know how difficult the process can be. Excellent credit takes time to build, but there are steps you can take to improve your score by 20 to 100 points within a few months. Here are some helpful tips that can help you achieve the credit score you desire!

1. Know your current credit score

The first step in building, or improving, your credit is simply obtaining a copy of your current credit report with all of your credit history. This can be a confusing task because there are multiple agencies that track your credit, and even more services that will charge you for accessing that information. Once a year, you can obtain a free comprehensive credit report from AnnualCreditReport.com.

2. Dispute & Resolve Errors

Once you receive your credit report, look for any inaccurate or suspicious entries. Errors are more common than you think. If you find an inaccurate entries on your credit report, contact the agency immediately. Be prepared to to provide the agency with documents and information that shows the agency the charge is incorrect and fraudulent. The agency is required to investigate the fraudulent charge within thirty days, and will update you on any and all changes to your credit report.

3. Pay Outstanding debts

Once you know and understand your credit score, you can begin taking the first step to improve it by paying any outstanding debts. To drastically change your rating by 20 to 50 points overnight, resolve all outstanding debts. If paying large amounts at one time are not possible, try to pay on debts incurred within the last three years, as paying those down will have the most substantial impact on your score. Older debts still need to be addressed, however, they do not impact your score as much as newer debts.

4. Consolidate Debt

Debt consolidation combines multiple debts into one with a lower interest rate. It is easier to pay off debt by saving on interest and by having fewer payments to manage. The most common way is using a balance transfer credit card or loan. You may also borrow against a 401(k), life insurance policy, or home equity.

5. Pay Debt On Time and In Full

The best way to improve and maintain a high credit score is to pay debt in full with each payment. Be sure to never miss a payment and to pay off short term debt as soon as you can. Paying the minimum amount/payments on debt, the payment is applied first to interest and then towards the principal. By doing this, the debt takes much longer to pay off, and will end up costing you more money in the end.