Did you apply for credit and get turned down? Or did a lender offer you less favorable terms for credit? If so, they have to give you a notice with certain information. Improving your credit may take some time, but taking some steps will help you do it.

How to improve your credit? If your report is accurate but you want to improve your credit:

• Know how to find legitimate help. A reputable credit counseling organization will spend time discussing your entire financial situation with you before coming up with a personalized plan to handle your money problems. They won’t promise to fix all your problems or ask you to pay before doing anything.
• Know what negatively impacts your credit score.
  • Paying bills late. If you think you might be late on a bill, call the company you owe money to. Explain that you’re having trouble paying your bill and ask for a payment plan.
  • Keeping balances high. Credit scoring models look at how close you are to being “maxed out,” so try to keep your balances low compared to your total credit limit. Check your credit card limits — and pay down your balances, if you can. If the creditor says you were denied credit or more favorable rates because you’re too near your credit limits on your credit cards, you may want to reapply after you pay down your balances.
  • Frequent credit applications. Many scoring models look to see if you’ve applied for credit recently. If you’ve applied for too many new accounts, or taken out large amounts of new credit, it could hurt your score.

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Teaching Suggestions

• Have students talk to others to determine how they first established credit.
• Ask students to make a list of actions they can take to improve their credit.

Discussion Questions

1. What factors can affect whether you can get credit, as well as the price you pay to get it?
2. Should you hire a credit repair company to help you fix mistakes in your credit report? Or, can you do it for yourself at little or no cost?