Banking Category Banking: the easy, simple banking guide

How to raise a credit score of 600

Having a credit score of 600 puts you at risk of getting high interest rates on any loans you apply for. You should raise your credit score to at least 620, though anything over 700 is preferable.

Once your credit score is above 700, you begin to qualify for lower interest rates and better loan agreements.

You will also qualify for more credit at most financial institutions. The steps to raising your credit score are simply, but they involve discipline and diligence.

Read your credit report from one of the three major credit bureaus: Equifax, TransUnion or Experian. Look for any errors or unresolved debts. Debts older than seven years should not be on your report. Call the credit bureau to remove any errors or have your attorney call for you. Contact creditors that list uncollected debts on your report. Pay them immediately or arrange a payment plan.

Begin to pay all your bills on time. Doing so for even one month can raise your credit score. Mail your payments or submit them online at least five business days before the due date to ensure the creditor receives your payment on time. The longer you maintain regular payments, the higher your credit score will go.

Pay down your credit card balances by paying more than the minimum payments each month. Do not use more than 30 per cent of your available consumer credit. Never max out your credit cards. Do not shift balances from one credit card to another. Call your credit-card company to negotiate a lower interest rate so that a greater part of your payment will go toward the principle balance.

Keep all your credit card accounts open. Continue to use one of them sparingly, and pay off the balance in full each month. Cut up the other cards, but don't close the accounts. Do not open new credit cards. Having old accounts in good standing increases your score by increasing your available credit.