3 Tips to improve your credit score, especially after a foreclosure or short sale

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PHOENIX – It’s been a rough couple of years and for many people, the proof is in their credit scores.

While there is no sure-fire, fool-proof way to improve your credit score – contrary to what some for-profit companies would have you believe – there are some simple steps you can take to push your number in the right direction. The best part is you don’t have to pay anybody to take action on your behalf.

The first step is knowing what your credit score is and where it falls in the standard ranking: 800+ is considered excellent, 730-799 is great, 680-729 is good, 580-679 is average, and 579 and below is bad.

“A credit score is almost like a living organism,” Phoenix financial expert Jacob Gold explained. “It’s constantly going up. It’s constantly going down.”

The first step is reducing the number of credit cards that you have. That includes cards on which you are a co-signer.

“Keep that credit card that you’ve had the longest,” Gold said. “If you were to cancel that credit card, you would also lose out on all that financial history.”

Another thing you can do is watch your spending. If you can avoid it, don’t ever run your credit cards up to – or worse, over -- their limits.

“A general rule of thumb is you never want to exceed 50 percent of your available credit,” Gold said. “If you go over that 50 percent, you’re going to see your credit score start to come down.”

While Gold is generally anti-debt, he said it’s a good idea to have a credit card or two so you’re prepared should cash not be an option.

If you have gone through a short sale or foreclosure, your credit score will take a hit of 200 or 300 points. The actual damage varies depending on the person and the situation, but it’s usually significant.

If you have other dings on your credit, you should know exactly what they are and dispute them if necessary.

“You want to be active and look at your credit score,” Gold said. “Go through [the credit reports] with a fine-tooth comb. If you see something that’s a ding that’s been awhile, give that institution a call and see if you can, in essence, improve your credit score by what is being reported.”

There are three main credit reporting agencies – Experian, TransUnion and Equifax.

While everybody is entitled to a free credit report once a year from AnnualCreditReport.com, be wary of ads that promise you free credit reports as there are often hidden fees. In addition, those services generally provide simply a credit history as opposed to a score or rating.

Likewise, the AnnualCreditReport.com service, while free thanks to the Fair and Accurate Credit Transactions Act of 2003 (FACT Act), is a historical report. While it can give you the information you need to dispute certain issues, it will not provide you with your numerical score. Once you order your fee credit reports from AnnualCreditReport.com, you will have the opportunity to purchase your credit scores.

Gold recommends that you do.

“I would say pay a little money and get a credit rating from all three bureaus,” he said. “Really get an idea what your score is and how to actively manage that score.”