4 Simple Ways to Improve Your Credit
How a few clicks and a phone call can boost your score instantly and save you money.
Our credit score is like a thumbprint, a unique identifier of our financial behavior that tells lenders how responsible we are with money and how likely we are to pay off a loan. A credit score is especially important if you are in the market for a loan or a mortgage, and the higher your score, the better the rates you qualify for and the more money you save over the life of the loan.
If you are in the market to purchase a home, car, or take out a loan or apply for a credit card, it’s a good idea to check your credit and see if there are ways to boost your score. Here are some of the easiest ways to improve your credit score.
Be on time, every time.
Payment history is the single biggest factor that affects your credit score and can stay on your credit report for up to 7 years, so be sure to pay your bills on time consistently. The best and easiest way to do that is to set up automatic payments for things like student loans, medical bills, credit cards, and utilities.
Clean up any errors or past mistakes.
Clerical and human errors do happen, and when they do they can negatively affect your credit score. Some of the most common errors are:
- Closed accounts showing as open
- Duplicate accounts (possibly with different names)
- Inaccurate payment history/account incorrectly reported late or delinquent
- Incorrect date of last payment, date account opened, or date of first delinquency
- Outdated balance or credit-limit information
- Reinsertion of inaccurate information after it was disputed and corrected
The good news? You can dispute these errors and get them removed from your credit reports. To get started, go to annualcreditreport.com to request your free credit scores, and review them for things like credit inquiries or late payments that you can quickly address.
Keep credit cards open.
Rushing to close down cards in an effort to streamline your finances or reduce debt can have a negative impact by changing your overall credit utilization score—this means you’ll appear to have a higher balance with less available credit. (Read on to the next tip for how to improve your credit utilization.)
Request a higher credit limit.
If you have been diligent with making payments and been with your credit card company with several positive years of credit experience, you could be eligible for an increased credit limit.
Why does this help? Because if you continue to maintain the same balance (hopefully a low balance) on your card but have a higher limit, you lower your overall credit utilization which in turn lowers your score. Pro tip: Be sure to ask your credit card company if it’s possible to adjust without a “hard pull” or “hard inquiry,” which can actually lower your score temporarily by a few points.