Your credit score plays a crucial role in your financial health, affecting your ability to get loans, credit cards, and even rental agreements. If your score isn’t where you’d like it to be, the good news is that you can improve it with the right strategies. Here are eight practical ways to boost your credit score.
Pay Bills on Time
Your payment history is one of the most significant factors affecting your credit score. Late or missed payments can hurt your score for years, while consistent, on-time payments show lenders that you’re responsible with credit. Setting up autopay or reminders can help ensure you never miss a due date.
Reduce Credit Card Balances
Credit utilization—the amount of credit you’re using compared to your total available credit—affects your score significantly. Keeping your balances below 30% of your credit limit is ideal, but aiming for under 10% can give your score an extra boost. Paying off high balances can quickly improve your score.
Avoid Opening Too Many New Accounts
While having multiple credit accounts can be beneficial, opening too many at once can negatively impact your credit score. Each new application results in a hard inquiry, which can lower your score temporarily. Only apply for new credit when necessary.
Don’t Close Old Accounts
The length of your credit history also affects your score. Closing old credit cards can reduce the average age of your accounts, potentially lowering your score. Even if you don’t use an old card often, keeping it open can help maintain a longer credit history.
Check Your Credit Report for Errors
Mistakes on your credit report, such as incorrect account balances or fraudulent activity, can harm your score. Reviewing your credit report regularly allows you to spot and dispute errors. You’re entitled to a free credit report annually from major credit bureaus, so take advantage of this resource.
Diversify Your Credit Mix
Having different types of credit—such as credit cards, auto loans, and mortgages—can positively impact your credit score. Lenders like to see that you can manage multiple types of credit responsibly. However, don’t take on unnecessary debt just to improve your mix.
Pay More Than the Minimum
If you only pay the minimum amount due on your credit cards, interest can accumulate quickly, keeping your balances high and your utilization ratio inflated. Paying more than the minimum helps lower your debt faster, reducing your credit utilization and improving your score.
Limit Hard Inquiries
Each time you apply for a new line of credit, a hard inquiry is recorded on your credit report. Too many hard inquiries in a short period can lower your score. Try to space out credit applications and only apply for new credit when absolutely necessary.
