8 Best Ways to Improve Your Credit Score

8 best ways to improve your credit score

Have you ever given your credit score a second thought?

You should, because your financial well-being pretty much rests on it. A better score means you get better loan terms and insurance rates. What's more, there are employers who check prospective hires' credit scores now, so it pays to keep your rating healthy.

The problem is that financial woes can hurt your score. Maybe a previous loan or credit card debt damaged your credit rating. How are you suppose to remedy this and improve it? Here are eight things you can do to improve your credit score.

Pull Your Credit Report

Find out where you stand by getting a copy of your credit report. It's impossible to fight when you don't know where you stand. It's a good idea to get a copy of your credit report from accredited agencies. Scan these reports and see if there are any errors. Errors here refer to typographical errors and loans that you have paid off, but are still showing as unpaid on your report. Make sure you get these corrected.

Pay Off Your Debt

Start paying off your debts. Try to get a good handle on all your debt payments. Slowly, pay off the items on your list to reduce your debt. It may take some time, but regular payments will reflect on your credit score and show you to be a responsible borrower.

Keep Using Your Credit Cards

Don't cut up your credit cards just yet. You don't have to go cash for everything. In fact, it will help significantly if you use your credit cards for small expenses. Obviously, don't rack up serious bills because these will only add to your outstanding debt. You just need to use your cards from time to time to make sure that credit card companies continue reporting your activity to credit bureaus. Cutting up your cards can actually lower your score.

Be Cautious When Shopping for New Loans

Don't shop for loans for too long. "Shopping for loans" means making inquiries for whatever loan you may need. This includes home and car loans. In fact, it should cover the "shopping" for new credit cards, too. This is because too many inquiries over a significant span of time can harm your score. Instead, try to keep your entire loan shopping to within a two week timeframe. This should not affect your score significantly.

Always Pay On Time

Pay all your bills on time. Late payments affect your score negatively. It's a good idea to set up timers and reminders if you have trouble remembering when all your payments are due. Make sure you never forget because late payments, even by a couple of days, don't just incur fees; they can also harm your score.

Never Max Out a Credit Card

Don't max out a credit card. This is a major no-no where credit scores are concerned. It's a bad idea to max out a card. This is why you need to check your limits before making any more purchases. A good rule of thumb is to not let your outstanding balance add up to more than 30% of your credit card limit. You don't want to push your score lower, do you?

Be Careful When Consolidating Debt

Don't consolidate accounts. This is a desperate move -- and one that can affect your score negatively. A lot of people transfer their balances when they feel overwhelmed by credit card debt and other loans. The problem is that this pushes all debt to one account. It's better to have several accounts with small amounts to pay off than to have everything in one giant container.

Share Credit Card Accounts Wisely

Be wary of shared accounts. This happens to a lot of divorcing couples. Sometimes, joint accounts can be problematic. Make sure your ex-spouse and you can discuss the responsibilities of paying off debt on joint accounts and closing them down to ensure that no future black marks appear on your credit score.


    • DC @ Young Adult Money

      DC @ Young Adult Money 10/01/2013 5:25 a.m. #

      Great tips! One thing I became very conscious of was the fact that if you consistently charge more than 1/3 of your credit limit your credit score can get dinged. I know in college when I had a lower limit I probably had too high of a balance too often simply because I didn't pay it off every couple weeks. So switching to weekly or bi-weekly payoffs instead of monthly is a great habit imo.

      • Sicorra

        Sicorra 10/01/2013 4:11 p.m. #

        I agree - if your limit is low and your charges are high, paying more often is definitely a good idea.

    • Corina Ramos

      Corina Ramos 10/01/2013 6:31 a.m. #

      Our financial mistakes in the past definitely had an impact on our credit score and we are still "repairing it".

      I only learned several years ago that shopping around for loans or store credit affected our credit score so before we make we think about making a purchase at a store we find the best deal first then run an application.

      Credit cards...ugh. Those little things can get us in big trouble. We use ours once a month to keep it active but we make small purchases like filling up the cars with gas. We spend about $120 so it's easy to pay off a balance like that.

      Paying bills on time is not so much a challenge to pay as it is to remember to pay it. :). I like autopay for my bills to help me remember and avoid late fees...those add up. Believe me, I know!

      Great tips Sicorra! Happy Tuesday :)

      • Sicorra

        Sicorra 10/01/2013 4:19 p.m. #

        Everytime you apply for a new card, loan or mortgage a hard inquiry is done on your credit report to see where you stand. And if there are too many in a row it is deemed as a red flag and your score could suffer.

        Nice that you guys have been able to really reduce using your credit cards for just things like gas. Using cash is sometimes easier to manage.

    • Michelle

      Michelle 10/01/2013 8:51 a.m. #

      These are all great ways to improve a credit score. We always make sure to not carry a balance, not have a high utilization rate, and so on.

      • Sicorra

        Sicorra 10/01/2013 4:19 p.m. #

        Good work Michelle!

    • krantcents

      krantcents 10/01/2013 5:35 p.m. #

      I never thought about my credit score and still don't! I just pay my bills on time and the score takes care of itself.

    • Arelis Cintron

      Arelis Cintron 10/03/2013 10:01 a.m. #

      Great advice. I am in the process of paying down my debt and I forgot to keep using the cards that had nothing on them. I had one for a clothing store and haven't used it in more than a year and they closed the account last month. It was not a large credit amount but still, I know it'll effect my credit score slightly. Which reminds me to use the ones I have but are still open

      • Sicorra

        Sicorra 10/03/2013 3:31 p.m. #

        Thanks Arelis! Good for you for working on paying off your debt. I know it isn't easy or fun. I have had department store cards too that I stopped using and forgot about. Hopefully yours won't affect your score too much.

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