Steps to take now to give your credit score a boost

BOSTON — Houses, cars and credit cards - Americans have never held more debt than they do right now. The collective debt is more than $17 trillion.

How well you manage that debt, impacts your credit score.

But not all FICO credit scores are created equal or are accurate.

“The system is flawed,” said Evan Hendricks who is the author of “Credit Scores & Credit Reports: How the System Really Works, What You Can Do”.

Your records are compiled by the big three credit bureaus - Experian, Equifax and Transunion while FICO determines a score from those reports.

Credit scores range from 300 to 850 and are broken down into five categories from poor to exceptional.

A “good” score is between 670 and 739 while a “very good” score is between 740 and 799, but according to a 2021 investigation by Consumer Reports, aspects of the credit reporting system “appear to be fundamentally broken.”

34% of volunteers studied discovered at least one error on their credit reports.

29% found errors related to their personal information.

10% reported it was difficult or very difficult to access their credit reports.

Hendricks said your profile is not identical among the big three because their source data can be different, and perfection is not possible.

“The credit reporting system has records on 250 million Americans so there’s a lot of variety,” said Hendricks.

WAYS TO RAISE YOUR CREDIT SCORE

Hendricks said there are ways to protect yourself and raise your credit score like paying bills on time, keeping your credit utilization below 30% and limiting hard credit inquires.

Hendricks also recommended a couple of so-called “hidden tricks” that include:

1. Make two payments per month. Once when you get your bill and again closer to when your balance is reported to the credit agencies especially if you have made additional purchases. You can find out the date by calling your credit card company.

2. Take on additional credit cards. While it’s a hard inquiry, your utilization numbers will go up and it gives you the opportunity to establish a strong payment history, which is the No. 1 influence on your credit.

“The credit scoring system wants to see you have available credit, but you don’t need to use it… kind of ironic,” said Hendricks.

CREDIT REPAIR SERVICES

If you go online, there are no shortage of credit repair services but be careful.

“Things to watch out for [with credit repair services] if they promise we can remove all negative items or we can improve score by 90 points in 90 days, it’s unrealistic nobody can do that,” said Hendricks.

Experts say the good news is you don’t actually need an 850-credit score to be seen by lenders and banks as having perfect credit. In fact, a score of 760 and above is often enough to qualify you for the lowest rates and best lending terms.

This is a developing story. Check back for updates as more information becomes available.

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