Build better credit

Life happens – from emergencies to unexpected set-backs. Explore tips to improve your credit score.

In our current Michigan economy, many residents are struggling financially. Some have experienced reduced hours at work, cuts in take-home pay, medical expenses, retirement, unemployment and even foreclosure or bankruptcy. Others have maxed out personal credit and have high credit card debt. Even in these circumstances, it is possible to build up credit and improve a credit score. Let’s talk about how.

Credit scores decrease several ways. Customers do not pay as agreed and this is reported. Significant credit balances, opening new accounts, public record items, and old derogatory accounts with balances owing all cause credit scores to go down. Lower credit scores can affect how much you pay for insurances, a mortgage, getting a rental, and even getting a job. Improving your credit score can be a way to save money.

  • The best way to improve your credit score is to pay your bills on time. No late payments or other payment problems accounts for 35 percent of the credit score.
  • Another important way is to decrease your balances. The amount owed determines 30 percent of the credit score.
  • A third factor is the length of credit history. To improve your score, keep older accounts open and do not swap accounts constantly.

Credit bureaus also look at new credit and the types of credit used. Apply for new credit only when you really need it. Have a sensible mix of credit (mortgage, car loan, credit cards, department stores, etc.)

High credit score holders have the following profile:

  • No late payments or other payment problems.
  • Use less than 10 percent of the limit amount available on credit cards.
  • Most have credit histories of more than 20 years.
  • Most have opened no more than one new credit account in the past year.
  • Most have between six and 15 credit accounts.

To learn more about building a better credit report, read the Federal Trade Commission publication “Facts for Consumers.” It includes useful information about your legal rights, getting a free copy of your credit report, dealing with debt, avoiding scams and identity theft, and other resources.

Michigan State University Extension also offers classes on personal financial management, including credit topics. Take the new online class, visit the MI Money website or contact your local MSU Extension office to find an in-person class near you.

Another suggestion is to limit credit temptations. Tired of having your mailbox crammed with unsolicited mail, including preapproved credit card applications? Fed up with getting telemarketing calls just as you're sitting down to dinner? Fuming that your email inbox is chock-full of unsolicited advertising? The good news is that you can cut down on the number of unsolicited mailings, calls, and emails you receive by learning where to go to "just say no." Opt out by calling toll-free 1-888-5-OPT-OUT (1-888-567-8688) or visit    

You can improve your credit score by taking some thoughtful steps. Depending on your level of debt, it may take months or a few years of steady progress, but it is doable by making a plan and sticking to it.

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