9 Ways to Improve Your Credit Score

You’ve seen the commercials explaining how important it is to check your ever-fluctuating credit score. You’ve investigated, learned your score, but now what? Knowing your score is the first step to having good credit, but having a good score takes further steps.

1. Reflect on Your Report

Discover bad habits you may have. Do you make your payments on time? Do you max out cards? Does your spending exceed your limits and ability to pay cards in full? Being honest with your credit missteps is important in knowing how to rectify and maintain good credit in the future.

2. Get a Credit Card and use it Responsibly

If you don’t have a credit card, you cannot build good credit. Using your credit card wisely, paying your bill in full and on time is the best way to begin your strong credit history.

3. Don’t Open Too Many Cards

Retailers often incentivize opening a card for a 10% or more discount. It may be a good idea to do this—but don’t take up every offer like this that you get. Not only will it be difficult to keep track of your many lines of credit, but each time you apply for a card your credit is checked and dinged.

4. Become Current on Your Payments

Setting up a schedule that works for you and paying your card on time is vital to a healthy credit score (35% of your score to be exact). By looking at your income and when bills are due, you can determine the right system for yourself. Some may choose to set up alerts on their phones; others may choose to pay all bills the same day each month, just make sure you have something in place. It’s quite easy to have a payment slip your mind costing you in fees and valuable credit points.

5. Keep Your Balances as Low as You Can

The “credit utilization ratio” is an important concept to understand. You’re judged by how much available credit you have compared to how much you are using. A ratio of no more than 10% will look great on a FICO score, and it should never be more than 30%.

6. Keep Cards Open

If you have struggled with debt in the past it may feel satisfying to close an account once you have paid it in full, but this is not in your best interest. If you feel too tempted by your available credit you may think about other ways to resist, like putting your card in a block of ice, or hidden away somewhere. This may sound silly, but keeping revolving credit is important to a strong credit score, and finding ways to ignore your credit lines may be what best suits you if you tend to overspend.

7. Raise Your Credit Limit

In the spirit of the credit utilization ratio, you want to have as much credit available to you as possible. You can call creditors and ask them to raise your credit limit to bolster this percentage. It’s advisable to look like a responsible borrower, so be sure that you are current on payments and do not owe much before requesting a credit limit increase.

8. Negotiate with Collectors

If a bill has gone to a collection agency (something you might learn from your credit report) you can always reach out and ask that in exchange for full payment that they report that the bill has been paid as agreed. It can’t hurt to ask.

9. Reach out for Advice

If you have trusted friends and family members whom you know to have strong credit scores, have an open conversation with them about their personal habits. People who know you well might be able to offer advice that speaks to your style and ability, and share what has helped them develop strong credit scores. Additionally, you can always call your credit union to ask questions.

Once you have established a good system of payments and strengthened your credit utilization ratio, you can be certain that your credit score will steadily increase over time. Be patient with your score, maintain good habits, and enjoy seeing your score rise over time.