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Try to boost credit score during a downturn

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The average credit score has barely budged despite a recession that's lasted more than a year, according to credit reporting agency Experian.

But what has changed significantly is the score needed to be viewed as a good credit risk to lenders.

Two years ago, you could easily get credit if you had a FICO score of 680 or higher, says John Ulzheimer with Credit.com. Now to be considered a very good credit risk, lenders expect 750 or more, he says. The highest FICO score possible is 850.

So, if lenders are being pickier, how can you improve your score?

The fast way is to pay down your credit card balances, which would swiftly bring down the ratio of outstanding debt to available credit, says Craig Watts, a spokesman for Fair Isaac, creator of the FICO score. Sometimes consumers complain that their FICO score is in the 600s even though they never missed a payment, Watts says. As it turns out, he says, their score was depressed by high debt levels.

You can quickly boost a score also by reviewing your credit reports and correcting errors, Watts says. Scores are based on information in credit reports.

You are entitled to a free credit report annually from each of the three major credit bureaus. Order it online at www.annualcreditreport.com or by calling 877-322-8228. (Marylanders can get free reports annually under state law, too.)

Some scores can only be improved over time.

Everyone would have a fabulous score, Watts says, if they never missed a due date with any bill, kept credit card balances low compared with credit limits and took out new credit only when absolutely necessary.

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Copyright © 2014, The Baltimore Sun
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