Old is good.
Credit cards have much greater longevity on your credit report than an installment loan. So, avoid closing your oldest credit-card account, even if you never use it.
Debt is bad.
Paying down card balances is one of the most effective ways to improve your credit score, according to Fair Isaac.
Timing is everything.
Pay off account balances three to four months before you apply for a loan. Try to keep balances low all the time.
Get credit where due.
If a creditor you pay regularly is missing from your credit report, its absence could suppress your score. Ask the nonreporting lender to submit the data, which may raise your score.
Mind your mix.
Credit-scoring models often give more points for responsible handling of national bank credit cards, such as Visa and MasterCard than, say, department-store cards. A mix of installment loans and one or two national bank credit cards will improve your score. Too many of the disapproved types of credit may hurt your score.
Watch your inquiries.
Each time you apply for a loan, the lender pulls your credit report, which generates what credit bureaus call a “hard inquiry.” Those are the ones that can affect your score. If you’re loan shopping, do so within a 14- to 30-day period to minimize multiple hard inquiries
Be careful online.
Avoid regularly applying for loans online just to test what rate you qualify for. Such online activity also generates multiple hard inquiries. Instead, go to the loan-center area of Fair Isaac’s site (www.myfico.com), where you can get rate estimates pegged to your stated FICO score from lenders in your area. Apply for credit only when you need it and intend to open an account.
Choose good sources.
If you need to open new credit accounts to re-establish your credit rating, make sure you borrow from lenders that report thoroughly and fully to credit bureaus.
