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Question By
peqelis

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How can I improve my credit score?
Right now I have a 603 credit score which is really bad. How can I improve this score? I have 3 credit cards with 88% to 93% of utilization plus an auto loan. I was thinking if I try paying off one by one of my credit cards it will help, or is it better if I pay an even amount to all my three cards even if it take a little bit longer?

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Find a way to pay down your credit cards. Your utilzation rate is based off of all revolving credit and all available credit, so it doesn't matter if you pay one or a little on all. What matters is that you decreased the amount of debt you carry. Personally, I'd start with the highest interest rate, but some people like the positive reinforcement you get from paying off small debts first.
 

Some general guidelines are:

-Consistently pay your bills as agreed upon every month. Make sure you're NEVER late. Change your billing dates if they currently hit at inconvenient times of the month.

-Pay down your revolving balances so you're at <20% overall (add ALL of your balances together and calculate 20%. This is your goal balance to carry. You can carry $0 balances on all cards but 1 with 20% or les on it. Or you can spread the 20% across all cards).

-Review your credit reports from all three bureaus (www.freecreditreport.com will give you one from each every year). Make sure there are no errors or inconsistencies and contact the bureaus individually to dispute errors.

-Do not apply for new credit cards or lines of credit (car loans, cell phones, mortgages, anything that requires an inquiry)

-Do not close any cards once the balance is $0, or if you do close cards, leave the one with the highest limit and the oldest one

-Review your accounts in collections section, if they're newer (not close to 7 years old), can you pay the debt? If so, contact the creditor and ask for a debt verification letter. If the debt is yours, ask for a payment plan and ask to have them remove the derogatory mark after.

-Give it time. While you can do major damage to your score in a short amount of time, it takes a lot longer to fix it.

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