3. Don't despair if you have missed payments. It's never too late to clean up your act. Get yourself current as quickly as you can and then stay current. Your score will begin to improve within six months— and the longer you keep it up, the more noticeable the increase will be. The negative weight FICO gives to bad behavior like delinquencies lessens over time, so as long as you stay on the straight and narrow, those black marks will eventually disappear from your record for good.

4. Keep your balance well below your credit limit.
Of all the factors you can control—and improve quickly—how much you owe is probably the most powerful. What makes this especially important is that ever since the credit crunch first hit in the fall of 2008, credit card companies have been cutting customers' credit limits without warning—a practice that can be devastating to your credit score. Say you've got a $1,000 balance on card with a $2,000 credit limit—and then the card company slashes your limit to $1,000. Suddenly, you've gone from 50% credit utilization to being maxed out, and being maxed out can cost you as much as 100 points. This is why I recommend you use the DOLP plan I explained in Step 3 to pay down all your credit card balances as quickly as possible.

5. Spread your balances around—and don't borrow from Peter to pay Paul.
Using one credit line to pay off another sets off FICO alarm bells—even if all you're doing is consolidating your accounts. All other things being equal, your FICO score will be higher if you have a bunch of small balances on a number of different cards rather than a big balance on just one or two.

6. If you rack up high balances, pay your credit card bill early.
The "Amounts Owed" part of your FICO score is based on the balance due listed on your most recent credit card statements. So even if you pay your bills in full each month, running up high balances can still hurt your score. You can avoid this problem by paying down all or part of your bill before the end of your statement period, thus reducing the balance due that will be reported to FICO.

7. Hang on to your old accounts, even if you're not using them.
Closing old accounts shortens your credit history and reduces your total credit—neither of which is good for your FICO score. If you have to close an account, close a relatively new one and keep the older ones open. Also, closing an account will not remove a bad payment record from your report. Closed accounts are listed right along with active ones.
Adapted from Start Over, Finish Rich. Copyright 2009 by David Bach. Reprinted by permission of Random House, Inc.


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