How to Boost Your Credit Score

Your credit score is important for understanding your overall financial health. A higher score will help you get approved for new lines of credit with the lowest interest rates possible. If yours is not as high as you'd like for meeting your financial goals, don't despair. With some time and effort, you can improve your credit score:  

1. Review Credit History 

Before you can improve your credit, you need to know what's affecting it. A history of on-time payments, low credit card balances, a variety of credit and loan accounts, older credit accounts, and minimal credit inquiries all contribute to a higher credit score. Credit score detractors include late or missing payments, excessive balances, judgments, and collections. 

2. Pay On-time 

Your payment history is the biggest factor affecting your credit score, so it's crucial to avoid late payments. Here are some helpful tips: 

• Use a filing system to track your bills 

• Set alerts for upcoming due dates 

• Set up automatic payments from your bank for recurring monthly bills 

• Charge bills to a credit card and pay it off monthly 

3. Pay Down Credit Balances 

30% of your credit score is the credit utilization ratio, which shows the percentage of open credit that you're using. The best way to improve this is by paying down your credit card balances. 

4. Maintain Old Accounts 

Your credit age accounts for 15% of your score, so it's advantageous to keep old credit cards open, even those that are only used sporadically. Keep annual fees in mind when you're deciding which cards to keep; high fee levels may not be worth the benefits to your credit score. Use old cards with low annual fees for small purchases and pay them off monthly to keep them active. 

5. Stop Requesting New Credit 

While more available credit is helpful to your score, a new account lowers your credit age and results in a hard inquiry on your credit report, which is a temporary hit to your overall score. 

6. Consolidate Debt 

If you have multiple debts outstanding, consider a debt consolidation loan to pay them off all at once. This will enable you to deal with one single payment, usually at a lower interest rate. A similar option is to utilize a balance transfer credit card. These often have a 0% promotional period, but watch out for transfer fees. 

7. Use Credit Monitoring 

An average of one in five credit reports contain errors, so monitoring your credit report is important. Sign up for a free service that sends an alert when your score changes. An actual personal review of your credit report is also necessary. Check for accuracy of accounts, payments, and balances, and dispute errors directly with the appropriate credit bureaus. 

Improving your credit score is important, particularly if you're planning for a large purchase in the future. With a little effort, you should see a substantial difference in your credit reports within a reasonable timeframe.