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Released: January 30, 2008

Improving Credit Score Can Reduce Loan Costs

MANHATTAN, Kan. – Consumers with credit scores of 700 or more typically get the best interest rates, said Marilyn Bischoff, Extension family economics specialist at the University of Idaho, Boise.

Low-scoring individuals with a credit score in the 400 to 500 range may have difficulty obtaining a loan, be required to make a larger down payment and have to pay a higher interest rate on their loan, said Bischoff, speaking at a training session for K-State Research and Extension agents in Manhattan.

Payment history, debt load and the types – and amount – of credit available factor into credit scoring, said Bischoff, who offered these tips for building a solid credit history and improving one’s credit score:

* Pay bills on time, even if only making the minimum payment.

* Mail payments early to ensure delivery before the payment deadline.

* Reduce debt.

* Maintain a checking account responsibly – watch your balance so as not to overdraw and run up costly fees unnecessarily.

* Apply for a credit card with the local store, bank or credit union; request a low limit for manageable monthly payments. Use the card regularly and make payments promptly.

* Apply for a small loan from a reputable source. Make payments regularly to clear the debt.

* If anticipating a late payment, contact the creditor. Most will typically work with you, if they know that a payment will be coming.

* Try not to apply for new credit unnecessarily.

* Request a credit report annually to verify your credit history by calling 1-877-322-8228 or

Consumers who have not previously checked their credit history may want to request one report from each of the three reporting bureaus during the first year in which they track their credit history. Requesting one report from each agency at four-month intervals during that first year should provide a good picture of one’s credit history over a year’s time, Bischoff said.

Consumers are eligible to receive one free credit report from each bureau during a calendar year.

Reporting agencies usually charge a small fee for a credit score, which is derived from the credit history, said Bischoff, who suggested requesting a credit score annually. If, however, a problem such as identity theft or an error such as failure to record loan payments in a timely manner is reported, consumers will want to request one or more additional reports to make sure the error has been corrected.

“Be patient,” Bischoff said. “Improving your credit history and score may take a couple of years, but is well worth doing.”

More information on personal finance and money management strategies is available by contacting any county or district K-State Research and Extension office or on its financial management Web sites:  or


K-State Research and Extension is a short name for the Kansas State University Agricultural Experiment Station and Cooperative Extension Service, a program designed to generate and distribute useful knowledge for the well-being of Kansans. Supported by county, state, federal and private funds, the program has county Extension offices, experiment fields, area Extension offices and regional research centers statewide. Its headquarters is on the K-State campus, Manhattan.

Story by:
Nancy Peterson
K-State Research& Extension News

Additional Information:
Marilyn Bischoff is at