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Request your free annual copy of your credit report =from each agency. Simply knowing your score isn't enough, you'll need to take a look at each trade line and determine what you can do to improve your situation. All consumers are entitled to a free credit report once every 12 months (See Resources).
Review your credit report line by line. Each item on the report is labeled with the creditor's name; the last reported balance, high credit, past due amount and number of late payments is also shown. Circle any accounts that look incorrect or unfamiliar to you.
Dispute the items that may be inaccurate. Mistakes do happen; if a negative account is hurting your credit bureau, disputing it may help you remove it. You can file a dispute online with all three credit bureaus. See Resources to begin filing your dispute. Have your credit report copy handy--you'll need the report number.
Contact creditors that you have default or past due accounts with. The telephone number for each creditor is listed on your credit report. Try to settle the old
debt, or work out a payment plan, if possible.
Pay down your active balances. A large portion of your credit score is derived from your balance-to-limit ratio. For example, a higher score will result from a credit card with a zero balance and a $1,000 limit, versus a credit card with an $800 balance and a $1,000 limit. The lower your balances are in proportion to your limits, the higher your score will be.
Attempt to acquire new credit. Although this will be difficult with a credit score in the low-400s, it is possible. Be careful not to go overboard. Opening up too many new accounts can further reduce your score. With a low credit score, you may have to consider a secured credit card, which requires an initial deposit--but almost guarantees approval. Keeping the balance low, preferably at zero, will improve your score over time and help you establish new positive credit.
Pay your bills on time. One of the most important factors in improving your score is making timely payments--month after month. This will take time, but eventually, it will raise your credit score.