How to Improve Credit Score Tips

Posted On February 22, 2023

Whether you are just starting out or have had credit problems in the past, there are several things you can do to improve your credit score.

But remember, credit scores take time to build and aren’t as easy to repair as you might think. Improving your score takes patience and discipline.

1. Pay Your Bills on Time

Having a history of paying your bills on time can help you build a credit score. This can make it easier to get a mortgage or car loan, and may help you obtain better interest rates on credit cards.

Keep track of your bill due dates in a calendar or planner and set up reminders online, through email or other notification systems. If you have trouble remembering, consider using automatic payments that withdraw money from your checking account or charge your credit card.

Keeping your bills paid on time can also give you a bit of a “halo,” meaning that future creditors will take you more seriously. For example, if you have been paying your rent on time for several years, you might be offered a better apartment.

2. Keep Your Credit Card Balances Low

Credit utilization accounts for a significant portion of your credit score, which is why it’s important to keep your balances low. You should aim to keep your credit utilization ratio below 30%.

You can lower your credit utilization rate in several ways, including paying down your balances or asking for a credit limit increase. You can also set up balance alerts to let you know when you reach a certain percentage of your credit limit.

One of the best ways to get a jump on your credit utilization is to pay off your balance before the end of your billing cycle. This way, your issuer will report your payment activity to the credit bureaus when it’s due and you’ll look like you have a low balance on your statement.

3. Ask for a Credit Limit Increase

A credit limit increase can help you get more wiggle room to spend without maxing out your card. But before you request one, it’s important to understand how it affects your credit score.

Generally, creditors like to see a lower debt-to-credit utilization rate, or the amount you owe compared to your credit line. If you do apply for a limit increase, make sure to keep your utilization ratio below 30% to avoid a negative impact on your score.

You can ask for a credit limit increase online or over the phone. Just make sure to have the necessary information ready, such as your annual income, employment status and monthly rent or mortgage payment.

4. Don’t Apply for New Credit

Several new credit card applications in a short period can lower your credit score. This is because every time you apply for a new line of credit, the lender or creditor will pull your credit to verify your application.

Each of these hard inquiries will lower your credit score by about five to 10 points. It’s best to avoid applying for several new cards within a short period, such as before you apply for a mortgage.

Keeping your credit utilization low is also an important factor in calculating your credit score. Ideally, you want to keep your overall credit utilization at 30 percent or below.

5. Keep Old Accounts Open

Keeping old accounts open helps you maintain a good credit mix, extend the average age of your credit and keep your credit utilization low. This will all help improve your credit score.

In fact, the length of your credit history accounts for 15% of your FICO score. So it is best to maintain as many of your older open accounts as possible, says McBride. You should also try to keep some of your old cards active by making small purchases on them from time to time. This will help prevent your credit issuer from closing them for inactivity and keep your credit utilization lower.