How to Improve Your Credit Score

With lenders putting so much stock in a consumer's credit score, it's critical to know how to improve it.

Boosting a credit score is based on fixing errors in past credit history and maintaining good credit history moving forward. According to MyFICO.com, there are three critical steps consumers should take to improve their credit score.

Check credit reports: Request a free copy of your credit report and check it for errors. In particular, check to make sure there are no late payments incorrectly listed for any accounts and that the amounts owed for each open account is correct. Any errors should be disputed with the credit bureau and reporting agency, since negative incidents can play a large role in determining a score.

Set up payment reminders: Making your credit payments on time is one of the biggest contributing factors to your credit score, so consumers should take advantage of bank payment reminder programs or online automatic payments. Delinquent payments, even if only a few days late, and collections can have a major negative impact on a FICO score.

Reduce debt: Use the credit report to make a list of all accounts, then go online or check recent statements to determine how much is owed on each and what interest rate is being charged. Come up with a payment plan that puts most of the available budget for debt payments towards the highest interest cards first, while maintaining minimum payments on the other accounts.

According to MyFICO.com, raising a credit score after a poor mark on a report or building credit for the first time will take patience and discipline. While it isn't a quick fix, opening new accounts and paying them off on time will help raise a score in the long term.

Chad Brooks is a Chicago-based freelance business and technology writer who has worked in public relations and spent 10 years as a newspaper reporter. You can reach him at chadgbrooks@gmail.com or follow him on Twitter @cbrooks76.