01/13/2014 09:18 pm ET Updated Mar 15, 2014

3 Legitimate Ways to Improve Your Credit Fast

Credit scores are a lot like the family dentist -- easily forgotten until desperately needed. Consumers often begin checking their credit report and scores a few months before buying a home or refinancing a mortgage. Realizing that a higher score can save them thousands of dollars, they are then left trying to improve their score fast.

In the words of Wyatt Earp, however, "fast is fine, but accuracy is everything." This wisdom is as true in gun slinging as it is with credit scores. In an effort to improve their scores quickly, many consumers resort to expensive credit repair shops that are often as unnecessary as they are unhelpful.

So before you plunk down your hard-earned cash to a company that may not be able to help, consider these three legitimate ways to improve your credit score quickly.

Check Your Credit Report

The Federal Trade Commission found that five percent of consumers had significant errors on their credit reports. These errors were so significant that they could result in less favorable terms for loans, according to the FTC study. Correcting a serious error on a report can be the quickest way to see improvement in a FICO score.

Checking a report is free and easy. Consumers are entitled to an annual free copy of their credit report from each of the three major credit reporting agencies. The free report is available online at For those that find errors in their report, they can have the errors corrected, which may result in a higher FICO score depending on the nature of the error.

Pay Down Revolving Debt

Not all credit scoring factors are easily controlled by consumers. For example, a late payment stays on a credit report for seven years, with no exceptions. There are, however, some important factors that a consumer can control, and credit utilization is chief among them.

Credit utilization is a ratio of a consumer's debt to available credit. For example, a consumer with a $2,500 balance on a credit card with a $5,000 limit would have a credit utilization of 50%. All other things being equal, a lower credit utilization results in a higher FICO score.

According to a recent interview of FICO's Tom Quinn, consumers should aim for credit utilization of 1 to 20 percent. By paying down credit card, home equity lines of credit and other revolving credit, a consumer can reduce their credit utilization and increase their score.

Pay Your Bills On Time

Payment history is the single most important factor in the FICO formula. As noted above, a late payment remains on an individual's credit report for seven years. The FICO score, however, looks at more than just the existence of a late payment. FICO also considers the recency and frequency of late payments, as well as the severity of the late payment (e.g., 60 days late is more severe than 30 days late).

As a result, a single 30-day late payment five years ago will not have the same affect that multiple late payments occurring in the past six months will have. This is good news for those looking to increase their score. By consistently making payments on time, a consumer can see their FICO score rise even if there are older late payments still on file.

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