HOW TO RAISE YOUR CREDIT SCORE

Your credit score can impact many areas of your life and its importance can’t be overstated.

By Ashley Chorpenning

AAA World Article

Your credit score can impact many areas of your life and its importance can’t be overstated. A poor credit score can affect your job search, personal insurance policies, and even interest rates on a mortgage—costing you hundreds or thousands of dollars over your lifetime. So if your credit score needs a boost, here are some ways to improve it:

PAY BILLS ON TIME

Even if you have minimal debt, making payments on time can have a substantial impact on your score. Falling even a few days behind on a payment, on the other hand, can impact your credit score negatively, so it’s important to pay on time.

If you find yourself forgetting to make payments, set up reminders or automatic bill pay. These strategies will help you keep track of your accounts, so you never miss or fall behind on a payment.

MAINTAIN LOW REVOLVING CREDIT BALANCES

Your balance-to-limit ratio is an essential factor when determining your credit score. To calculate your balance-to-limit ratio, add up all your credit balances and divide by your total credit limit. You never want to use more than 30% of your total credit limit at a time. Ideally, you should pay your credit balances off every month.

Once you pay off some of your credit balances, don’t close the accounts. Closing credit cards to increase your score is not a good short-term strategy. Keep in mind, closed accounts will still remain on your report.

ONLY APPLY FOR REVOLVING CREDIT WHEN NECESSARY

Don't only apply for a credit card or loan just to increase your credit score. It could end up backfiring. If you need to open new accounts, try to spread them out over time, as opening too many at once could negatively impact your score.

PAY OFF DEBT

If you currently have any type of debt, you should work toward paying it off. Not only will this increase your credit score but it will leave you feeling accomplished.

Review all of your accounts and the total amount of debt you owe. Then make a plan, such as repaying your smallest credit balance or highest interest debt first.

Remember increasing your credit score might not happen overnight. But by making positive changes and taking action over time, you can be well on your way to an excellent credit score.