5 Things You Should Be Doing To Improve Your Credit Score

Everyone understands the importance of maintaining a good credit score. In the world of credit cards and other types of loans, the higher your credit score the better your terms (annual percentage rates, credit limits, rewards).

credit_scoreDid you know that there are five simple things you can do to increase your credit score over time? Whether you already have a good credit score but want to make it even better or maybe have a less-than-perfect history and are looking to rebuild your credit- these smart financial moves really work. To be successful, it’s important to use these guidelines consistently. Hit and miss just doesn’t work with your credit and can actually undo all the positive things you are doing. Slow and steady will pay off in the end as you see your credit score increase!

  1. Pay your bills on time. Always- without exception. One late payment or missed payment can seriously derail all your good intentions. Consistent, on-time payments do more to boost your credit score than any other factor. Do whatever it takes to make sure you pay your bills on time every month- sign up for Bill Pay through your bank, set up automatic payments through your utility companies, request email reminders.
  2. Maintain low balances. This is especially true with credit card debt. In a perfect world, you should pay off your entire balance each month on credit card accounts and pay at least the minimum amount due on car loans, mortgages, etc. This saves you money (no finance charges). Financial experts recommend carrying outstanding balances of no more than 30% of your total credit limit at any one time. Remember that maxed-out credit card accounts can seriously damage your score.
  3. Have different types of credit accounts. A typical credit report contains a mortgage, at least one car loan, some type of revolving credit account (department store, furniture retailer), and credit card accounts. Lenders like to see that you can handle various types of credit in a responsible manner so this mix of credit is generally beneficial.
  4. Don’t let credit card accounts just sit. It’s better for your score to keep accounts active. If you are considering closing an account that you don’t use very often, just make a small purchase each month (dinner, gas purchase) and pay it off in full. Active, low-balance accounts slowly increase your credit score so think twice before closing one.
  5. Get a copy of your credit report at least once a year. Every consumer is entitled to one free copy of your credit report every year from each of the top three credit reporting agencies- Equifax, TransUnion, and Experian. If you are ever denied credit you are also entitled to a free copy from the agency that was used in the credit decision. Mistakes happen so it’s important to go over your report carefully and report any errors to the credit bureau. Another reason to do this- possible identity theft can be detected by regularly checking your report.