You've just received a copy of your free annual credit report, and oh my, the credit score (also known as the FICO score) is not good. What do you do? Well, below are some things you can do yourself, and over time they will raise your FICO credit score.
First, go through your credit report carefully, line by line, and mark all the items that are incorrect. Look for accounts that don't belong to you, late payments that you feel were not late, incorrect personal information, everything.
Now, write a letter that "disputes the accuracy" of each item, and list the items by line. Ask that these items be removed from you credit report because they are incorrect. Send this letter by Certified Mail to the credit agency, and keep the receipt. Be sure to keep a copy of the letter, the credit report and the receipt all together, you'll need them once you receive your reply. By law, the credit agencies have 30 days to verify the accuracy of the disputed items. If they can't verify the item, then they must remove it from your report. And, they have to send you a reply, telling you what they did and did not do. Disputing items is the single most effective thing you can do to improve your credit score quickly.
The second most effective thing you can do to help your credit rating, is to always make your payments on time. This is a simple thing to do that will really impact your credit scores. Late payments hurt your credit score.
There are other things you can do to help improve your score, most have to do with your credit cards. For instance, if possible, stop using your major credit cards (MasterCard and Visa cards), and starting paying down the balances. As your balances go down, you'll see your credit scores rise. One thing to note, be sure to not pay off the balance completely, this can actually lower your score. Look at your credit limit, and try to keep your balance above zero, but below 30% of the limit. This is the range that will give you your best credit rating.
Another thing you can do is take out either an installment loan to pay down your card balances, or borrow the money from friends or relatives and pay down your credit card balances to below 30% of you limit. Installment loans are treated differently than credit cards, so a loan will actually improve your score. If you borrow from friends or relatives the loan will not show up on your credit report, only the decreased credit card balances, which will help your credit score. Before you take out any loans, make sure you can afford to make the payments required.
So, check your credit reports regularly, and dispute everything that's incorrect. Make your payments on time, stop using your cards if possible, and pay balances down, but not off. If you can do most or all of these things, your credit score will start going higher and higher.