As we have looked at credit scoring issues in the past, we thought it could be useful to look at practical steps you can take if you want to improve your credit score. If you are still not sure what a credit score is, how it works, or what impact it can have on your life, you might want to take some time to review one or more of our previous posts. If you have a good grasp of the basics and understand why credit scores work as they do, you can then implement your knowledge by using these practical credit scoring tips to improve your credit score.
Improve Your Credit Score by Reviewing Your Credit Report
All your good work should go rewarded, but a mistaken entry on a credit report can derail what is an otherwise sound credit score building strategy. One of the best tips you can use to keep your credit score high is to review each of your credit scores once a year. Annualcreditreport.com is a website authorized by the Federal Trade Commission to release individual credit reports to each consumer once a year for free. Using the site to review your reports is something you should do on a yearly basis.
Improve Your Credit Score by Paying Bills on Time
The single easiest, and possibly best, way to get a higher credit score is to pay all of your bills on time, every time. If, for example, you have several credit cards, you can usually schedule your bills so that they come due on the same day each month. Paying all bills off on the same day will make it easier to remember, and easier to make sure you always pay them on time.
Improve Your Credit Score by Keeping Old Lines Active
Some people think that having fewer lines of credit is positive, and that by closing old forms of credit you can increase your score. This is usually wrong, and opposite of the reality. Remember, credit scoring companies want to know what you’ve done with the credit you’ve had in the past. If you have, for example, an old credit card that you haven’t used in a while but which you had always paid on time, keeping that credit card open and active on your credit report will boost your score. Instead of closing the card, you might take it out and use it every couple of months so that your timely payments stay fresh on your report.
Improve Your Credit Score by Keeping Your Credit Usage Low
Using credit cards, but not too much, is a key factor in having a good credit score. If you keep a credit card balance, you should aim to never have a balance greater than about 20 percent of the total amount of credit available on any given card. This credit utilization amount will show that even though you have available credit, you use it reasonably and responsibly.