In addition, applying for new credit cards or loans leaves inquiries on your credit report, which contributes to 10% of your credit. Each new inquiry will cost you a few points on your score, and they add up fast.
If you want your score to increase, leave things alone and avoid opening and closing accounts for a little while.
6. Pay off and Remove Collections
Collections on your credit report can lead to a big nosedive in your credit score. Collections show up on your account when you don’t pay a debt, like a credit card, loan, medical bill, or parking ticket. If you don’t pay long enough, those debts are passed onto a collections agency and show up as a collection on your credit report.
Sometimes those collections are just going to sit there and run their course. Most of the time, they will be on your credit report for 7-10 years. However, some creditors are willing to have them removed from your credit report if they are incorrect (see above) or resolved.
Contact the original creditor directly to see if you can work with them to remove the collection from your credit if you pay it off. Sometimes you will have to do some homework if it has been sold to a 3rd party collection agency, and you will have to work with them to get the negative information removed after the debt is satisfied.
7. Open a Secured Credit Card
I know that I just told you to avoid opening new cards, but there are exceptions to every rule. If you have a very thin credit report with only one or two cards, opening more cards will increase your score over time. It will take a short drop, and then rise over the coming months, but only if you keep a perfect on-time payment history.
If you can’t get a new card because your credit history is really bad, some banks will allow you to open a secured credit card to help rebuild your credit. A secured credit card requires opening a bank account and making a deposit for the full credit limit. That way, if you stop paying, the bank isn’t worried about losing money.