Your credit score plays a big role in your financial health—it can impact everything from your ability to get a mortgage to the interest rate you’ll pay on a car loan or credit card. Whether you’re starting from scratch or working to rebuild your score, here are seven proven steps to help increase your credit score.
1. Check Your Credit Report for Errors
Start by requesting your credit reports from all three major bureaus—Equifax, Experian, and TransUnion. You can get a free report once a year at AnnualCreditReport.com. Review each report carefully for:
- Incorrect personal information
- Accounts that don’t belong to you
- Duplicate listings
- Incorrect payment statuses
If you spot an error, dispute it with the credit bureau right away.
2. Make Payments On Time
Payment history is the single biggest factor in your credit score, making up about 35% of the total. Even one late payment can hurt your score. To stay on track:
- Set up automatic payments or reminders
- Prioritize at least the minimum payment due
- Contact your creditor if you’re having trouble making payments
3. Reduce Your Credit Utilization Ratio
Your credit utilization ratio compares how much credit you’re using to your total available limit. Aim to keep it below 30%, and ideally under 10%. You can improve this ratio by:
- Paying down existing balances
- Making multiple payments throughout the month
- Asking for a credit limit increase (just don’t increase your spending)
4. Don’t Close Old Credit Accounts
Length of credit history accounts for 15% of your score. Keeping older accounts open—even if you don’t use them—can help maintain a longer average credit history. Just be sure they don’t have annual fees or go dormant.
5. Avoid Opening Too Many New Accounts at Once
Every time you apply for credit, a hard inquiry is made on your report, which can temporarily lower your score. Too many inquiries in a short time can make you look risky to lenders. Be strategic and only apply when necessary.
6. Mix Up Your Credit Types
Having a variety of credit types—such as credit cards, a car loan, and a mortgage—can slightly boost your score by showing you can manage different types of debt. However, don’t take on new loans just to improve your mix.
7. Become an Authorized User
If someone you trust has a well-managed credit card with a long history and low utilization, they can add you as an authorized user. This can help boost your score—especially if you’re just starting out or rebuilding.
Improving your credit score takes time and consistency, but small steps today can lead to big improvements over time. A better score can save you thousands of dollars over your lifetime, so it’s worth the effort. Stay patient, stay organized, and don’t be afraid to ask for help from a financial professional if needed.
Por: jon iacono