Check Your Credit Report

Start by pulling a free copy of your credit report from AnnualCreditReport.com. This helps identify errors or areas for improvement. Look for incorrect account statuses, duplicate accounts, or fraudulent activity that could be dragging your score down. If you find mistakes, dispute them immediately with the credit bureau.

Bring Your Accounts Up to Date

If you have past-due payments, bring them up to date as soon as possible. Payment history makes up 35% of your credit score, so making consistent, on-time payments is crucial. Consider setting up automatic payments or reminders to avoid missing due dates.

Pay Off Collections

If you have accounts in collections, pay them off or negotiate a settlement with the creditor. While collections can remain on your report for up to seven years, a paid collection is viewed more favorably than an outstanding balance. Some lenders may also agree to remove the collection from your report once it’s paid.

Reduce Credit Card Balances

Keeping your credit utilization below 30% of your credit limit is key to maintaining a healthy score. For example, if your credit card limit is $10,000, aim to keep your balance below $3,000. Paying down high balances not only improves your credit score but also reduces interest payments over time.

Build Credit Wisely

If you’re new to credit or rebuilding your credit, consider opening a secured credit card or a credit establishment loan. Use the card for small, manageable purchases—such as a monthly subscription or gas—and pay it off in full each month. Responsible use will gradually boost your credit score and demonstrate financial reliability to lenders.

Your credit score plays a significant role in your overall financial health. By following these steps, you can work towards achieving important goals like homeownership or obtaining favorable loan terms. With patience and diligence, you can achieve a strong credit score that supports your financial goals.

Mary Wright is Senior Mortgage Loan Officer at F&M Trust.