Credit experts say that paying bills on time and managing your credit cards responsibly are the two things that impact your credit score most. But there are other ways to improve your score, too. The easiest and most under-the-radar way to increase your credit score is to whittle down your credit utilization ratio. This accounts for 30% of your FICO credit score. To help with this, set up calendar reminders or alerts on your phone for the dates of each of your bills so you know when they are due. This will help you avoid late payments, which can be very hard on your score.
A healthy credit score requires consistent payment history, a low utilization ratio, mixed credit types, and no significant public records or collection items. You can obtain your credit reports for free once a year from each nationwide consumer reporting agency, so it’s a good idea to check them to ensure there are no errors or signs of fraud that might be damaging your score.
Tips for Increasing Credit Score
Many things can negatively affect your credit score, including late payments, high balances on credit cards, and collections or judgments. However, you can recover from these negative factors by taking steps to improve your responsible credit use habits. These changes typically reflect in your scores within a few months. Paying bills on time and reducing your credit card debt can have the biggest impact on your score. If you can’t afford to pay your credit card balance in full, make sure to pay the minimum amount due each month.
- How much revolving credit you’re using, which is largely determined by how many balances you have on your cards and how high they are relative to the total available credit, is one of the most important thing you can do to incrase your credit score. The ideal ratio is 10% or less of your credit limit. If you’re struggling to reach this goal, consider asking your credit card company for a higher credit limit. Most companies allow you to request a credit limit increase online or over the phone.
- Don’t apply for too many new lines of credit in a short period of time. Lenders look at the length of your credit history when calculating your credit score, and opening too many new accounts will decrease this number. In addition, frequent hard inquiries can negatively affect your score.
- You should also check your credit score regularly. However, make sure you do this through a soft inquiry, which won’t damage your score. You can also sign up for a credit score monitoring service to track your progress and alert you of any changes.
