Raising Your Credit Score

Credit is getting harder to come by during these tough economic times. Kelli Grant, Sr. Consumer Reporter for SmartMoney.com, has some tips to help raise your credit score.

First, know your credit score. Ideally, you want it to be over 750 in these tough economic times. "Anything below a 700 is really going to be hit or miss," says Grant. But don't fret. Small changes over time can make a big difference. To see a major change in your score, you'll need at least a year of wise purchasing decisions and good payment history. However, it is possible to see small changes in as little as a month.

If you score isn't as high as you'd like it to be, there are some things you can do to raise it. Grant suggests opening a secured credit card. Unlike a normal credit card where your credit limit is assigned to you based on risk, a secured card requires a deposit. That deposit - your own money - is your credit limit. "Because you're borrowing against your own money, lenders are a little more willing to take on an applicant with a lower credit score," says Grant. If you use your secured card wisely, your lender is likely to upgrade your card to a regular credit card.

You can also try to take out an installment loan from your bank. By making the regular payments to the bank on time, you're building good credit. To get the best rate, try credit unions and small, local banks. These institutions tend to be more competitive than larger banks.

Also, consider piggybacking on someone else's good credit. Ask a close friend or family member to allow you to become a certified user of a credit with them. "Look for one that's got a long history of on-time payments, low balances," says Grant. You don't even have to have the authorization to make purchases - your name just has to be on the account. Your friend or family member's credit isn't at risk because the purchases and payments are still in their control. You, however, get the added advantage of benefiting from their good credit.

Another good way to boost credit is to use store credit cards when you shop. "Because you're only using the card in that one place... they're often willing to accept borrowers with a lower credit score," says Grant. However, be sure to pay off the balance in full each month. Some store credit card rates are near 30%, which can make it easy for interest to accumulate quickly.

Finally, look for an alternate credit score. Grant says some lenders are willing to look at on-time rent and utility payments, as well as your checking account history, to determine your lending risk. Also, ask if your lender is willing to look at a score from Payment Reporting Builds Credit. This is an alternate credit bureau that will verify your on-time payments for a small fee.

For more information on boosting your credit score, as well as other personal financial advice, click here to visit www.SmartMoney.com.

By Erin Petrun