How To Raise Your Credit Score

If your credit score is negatively affecting your ability to get credit on favorable terms, there are some straightforward steps on how to raise your credit score dramatically.  A high credit score will make it easier to qualify for mortgages, car loans, and credit cards, and will also help you to get lower interest rates on those loans.  So if your credit score needs a boost, here are four strategies to improve it. 

1. Pay your bills on time.  This may be the single most important thing you can do to improve your credit score.  When you make your credit card payments and loan payments on time, you are demonstrating that you know how to manage credit, and this will be reflected in your credit score.  If you have missed payments in the past, then get current and stay current.  Recent activity carries more weight than older activity, so regardless of past problems, stay current now, and your credit score will begin to improve.  

 

2. Pay more than the minimum payment on your credit cards.  If you make only the minimum payment on your credit cards, you are sending the signal that you are struggling financially, and this can hurt your credit score.  It’s always best to pay off your balance in full each month, but if you can’t do that, you should still pay more than your minimum balance.  Demonstrating your ability to consistently pay more than the minimum balance will improve your credit score.

 

3. Use no more than 30% of your credit limit on each credit card.  Lenders like to see a big gap between your credit limit and the amount of credit you’re actually using.  This is one of the major factors in determining your credit score.  So try to keep your balances (and current charges) to no more than 30% of your credit limit on each card.  If you’re above that now, try to pay down your balances so they are less than 30% of your credit limit, and your credit score will improve.

 

4. Use your older credit cards occasionally.  The older your credit history, the better.  If you stop using your oldest credit cards, the issuer may close the account or stop updating the account with the credit bureaus.  This can hurt your credit score.  So every few months, use your oldest credit cards to charge a small amount and pay it off in full when the bill arrives, and you will boost your credit score.

 

Once you begin demonstrating your ability to manage your credit wisely, your credit score will begin to rise, and you will be able to reap the rewards of a high credit score.

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