Banking Category Banking: the easy, simple banking guide

How to Raise a Credit Score Below 500

Your credit score is a number between 350 and 850 that indicates whether you are a good lending risk. If your credit report shows that you have a history of not paying debts on time, or if you have a recent bankruptcy or judgment against you, you may have a low credit score.

A low score can prevent you from getting good interest rates on loans and credit cards--if you can get approved at all. A credit score below 500 is considerably low. The good news is that there are steps you can take to raise your credit score and build a good credit history.

Evaluate your credit report. If you have recently been turned down for credit, you are legally entitled to request a copy of your credit report. You may also pull one free copy of your credit report from each credit bureau every year by visiting

Send a letter to any collection agencies you find on your credit report requesting validation of the debt. The Fair Debt Collection Practices Act states that a debt collector must provide written proof to you that the debt being reported on your credit report is yours. If the collection agency is unable to provide validation, it must remove the information from your file.

Check the dates on all accounts that have a negative effect on your credit rating. The Fair Credit Reporting Act sets a time limit for all entries except unpaid taxes. If a charge-off or collection account is more than 7 ½ years old, it must be removed. If a bankruptcy is more than 10 years old, it must be removed. Report any obsolete credit report entries to the credit bureaus.

Dispute any additional negative entries that you do not recognise or that you are sure do not belong to you. You may file a dispute with the credit bureaus by mail, over the phone or online. The credit bureaus are bound by federal law to investigate each consumer dispute they receive--and remove the entry if it cannot be verified by the creditor that is reporting it.

Establish a record of on-time payments to your current creditors. Your payment history on your debts accounts for 35 per cent of your credit score. By making your payments on time, every month, you will be steadily boosting your credit score.

Check your credit score again after six months. You should see marked improvement. It is unlikely that your score will still be below 500, but if it is, do not get discouraged. If you continue to demonstrate good debt-management skills and pay your debts on time, your credit score will soon climb to the point where you will feel confident, rather than apprehensive, when a lender attempts to pull your report.


  • Subscribe to a credit-monitoring service through one of the credit bureaus to get regular updates on your progress. This can help you stay motivated. You may opt to pull credit reports from websites other than the credit bureaus' sites or Doing so, however, will give you an estimated, rather than actual, credit score.


  • Tax debts hurt your credit score and will not be removed from your credit report until seven years after the debt has been paid. If you have ever been sent certified mail by a collection agency notifying you of a debt, or if you have ever admitted to a collection agency that you have received a notification letter, you will not be entitled to a debt validation unless the letter was received within the previous 30 days.

Things Needed

  • Credit reports