Establishing or Rebuilding Credit Scores: Options for Moving Forward

Your credit scores are prepared by FICO and other companies and are mainly based on your history of managing debts, such as whether you tend to make payments on time. Your scores play a significant role in your everyday life because the next time you apply for a loan or a credit card — or perhaps a new apartment or insurance —your scores could affect the final decision, including your costs.

For the many consumers with damaged credit scores and those with no credit record, here are some ways to improve your credit scores.

Consider consulting with a reputable credit counseling service. It can help you develop a customized plan to improve your credit score, which may include helping you decide how to prioritize your spending choices. Counseling services are available to help consumers budget money, pay bills and develop a plan to improve their credit histories.

 Be cautious of counseling services that advise you to stop making payments to your creditors or to make your payments to the counselors instead (so they can negotiate on your behalf with the lender). These programs can be costly, may result in your credit score becoming even worse, and they could be scams.

For suggestions on finding a reputable counseling service, visit the Federal Trade Commission’s website.

Understand what information is most likely to influence your credit scores. In general, the most significant factor affecting your score is whether you repay debts on time. Also important is how much you currently owe on each account compared to its original loan amount or credit limit. Additional factors include how long you have had your current loans and credit cards and the types of credit accounts you have (for example, managing both a credit card and an installment loan, such as for a car, could be viewed more favorably than just having one of those two loans).

Obtain and review a copy of your free credit report. Credit reports, produced by credit bureaus, detail each person’s financial history, and they are used to develop credit scores. Under federal law, you can get at least one free report from each of the nationwide credit bureaus every 12 months. If you find an error, contact the credit bureau directly and correct the record.

To order your free annual report from the three major credit bureaus — Equifax, Experian and TransUnion — visit or call toll-free 1-877-322-8228.