7 Tips for Raising Your Credit Score:
- Pay your bills on time – every time.
This is the all-important key to a good credit score. It matters more than just about everything else combined. Make sure that you pay not only your credit cards on time, but your mortgage, car payments and even utility bills. Otherwise you can run into what is called Universal Default. That basically means that because you were late paying your electric bill, your credit card company can raise your interest rate. Shady, I know. Not all credit card companies practice Universal Default, but enough do that you will want to be careful of it.
- Dispute inaccurate information on your credit report.
This one is probably a no-brainer, but you would be surprised how many people do not do it. It has been estimated that up to 40 percent of people have bad information on their credit reports. That bad info could cost you a loan, or raise your interest rates – and you don’t even know it’s there!
- Monitor your credit report regularly – at least once a year.
This goes along with step number two. If you are checking your credit reports from all three bureaus regularly, then you will be able to spot mistakes when they happen. It will also help protect you from identity theft because you will notice any suspicious accounts on your reports. You can get a free copy of all three credit reports here.
- Don’t close old accounts, even if you no longer use them.
There are some exceptions to this. As long as you are not paying outrageous yearly fees on a credit card, then it’s probably best to leave the account open, even if you no longer use the card.
- Don’t try to open too many new accounts at once.
Each inquiry on your credit report can lower your score as much as twelve points. There are two exceptions to this: Pulling your own report does not count against you, and shopping for a home or car loan with different companies will not lower it much either – as long as all the inquiries are within the same 30 day period.
- Never charge more than 30% of your available credit on any of your cards.
This is a big one. Charging up all your cards looks very bad to prospective lenders. Your average balance, and the maximum you have ever charged on the card get reported to the three credit bureaus. So, to really protect your credit, keep those balances low – Under 30 percent. Under 10% is even better! It is best to never carry a revolving balance.
- If your credit score is low, consider getting a secured credit card.
Secured cards are not just for people with judgments or bankruptcies. If your credit score is on the low side because of late payments, secured cards could probably benefit you. For one thing, they typically have low interest rates, and many have low yearly fees. They are the only cards where you are in control of your credit limit because you can send a deposit in any time you need to raise it. You can raise your credit score pretty quickly if you use them correctly.
No matter where your credit score is right now, if you apply these seven steps regularly, then you will see it go up, sometimes in a matter of months!