How To Raise Your Credit Score

Banks, obviously aren't the only ones that worry about credit ratings. Every one of us wants to keep that score as high as possible.

One of our viewers, Amberly Page wrote, asking us to do a story on legitimate ways to raise a credit score.

There's no magic spell for fixing it. But if you are struggling with a poor credit score, don't be discouraged. With proper planning, you can turn your credit around.

"If you can't live within your means then you're going to get yourself in trouble. Because i did that years ago. And we're not going there again," said Birmingham resident, Linda Gunter.

Linda Gunter had trouble with her credit years ago. It took a few years, but she dug herself out of the hole. But how?

"I never use a credit card. I use my debit card. I've learned that if i want to buy something and i can't pay cash for it i just don't get it," she said.

It sounds easy. But repairing bad credit actually takes planning. More improtantly, sticking to that plan.

"Make sure that your income and outgo are equal. Because you are never going to be able to repair your credit score or get out of the bad downward spiral if you don't have approximately equal income with your expenses,"said Stephen Yoder.

Stephen Yoder is a professor at UAB's School of Business. First things first. You can't fix what you don't know.

"Know what your credit score is. And there are a couple of ways to do that," he said.

"I get the yearly free credit report. I go online and you can get one from each of the three agencies. And i do that once a year," said Birmingham resident, Ray Lively.

So, you get the report, and it's not good. Could something be incorrect? If you think so, put it in writing.

"Many times they will suggest you put it in writing. If there are any mistakes you should try to correct them. They may even make a good will adjustment for you occasionally," said Yoder.

Be honest with yourself. Have you been on top of your bill payments?

"Pay your bills on time. And if you have trouble with that, and if you aren't organized, if your bills accumulate on your kitchen table, set up an automatic payment system," he said.

And what about those credit cards?

"The second strategy for improving you credit score is not to be at the top of your credit limit on a revolving credit line like your credit card. The credit reporting bureaus like to see you at most at about 30 percent of your credit line," said Yoder.

How about credit repair agencies? You know the ones that promise to fix everything? is it better to go it alone?

"The one time that i think it might be worth paying an organization or an outside service to help you get your credit up would be if you have to borrow money for say a house and you need borrow that money within the next six weeks or so," said Yoder.

Yoder says, if you need to borrow, make your decision as soon as you can. Don't jump around and rack up several credit inquiries. That could raise a red flag.

He says lenders are more understanding with long term debts, as long as payments are made on time. He says you are not nearly as rewarded for paying down those credit loans as you are for a revolving credit line.