The best way to fix your credit score is to start employing good borrowing practices. First, ensure the credit information on your report is correct. Next, take steps to improve the information present. Finally, avoid steps that can actually damage your credit despite having the appearance of financial benefit.
Correct Information
View your credit report at any of the three major agencies. You do not need to know all three as they will likely be very similar. If there is any item reported that you have no knowledge of or believe is incorrect, contact the reporting lender and the credit agency immediately to request correction.
Improve your Score
Once your score is correct, you can take steps to build it up. Take small loans and use your available credit cards where possible. Pay down your balances monthly, and be sure to make all your maintenance payments on time. Instead of paying in cash for small purchases like groceries, consider using a credit card. As long as you repay the balance immediately, the expense will be minimal and the impact for your score will be very beneficial.
Avoid Negative Behavior
Contrary to advertisements, consolidation, refinancing and loan workout plans can actually damage your credit substantially. These options, unless offered in a penalty-free environment, will cause you to lose ground with your credit. Only take these routes if you are in over your head and face default without the help. If you are using a federal program, you may have options without penalties, but this depends on your original loan contracts.
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