7 Ways to Improve a Credit Score

Some ways to improve a credit score are surprisingly simple.

May 17, 2014 at 12:00PM


Source: Pixabay.

You might not think too often about your credit score and credit report, but they can have a huge impact on your life. Landlords, for example, can check to see how delinquent you've been in paying past obligations. Insurers, banks, and credit card companies  can look into your credit score, too, with financial consequences. A high score can lead to a significantly lower mortgage rate, which can save you tens of thousands of dollars. Thus it's well worth learning about ways to improve a credit score so that your score is as perfect as possible.

Here are a handful of the many ways to improve your credit score.

  1. Fix those errors. One of the simplest ways to improve a credit score is to correct errors in your credit report that are dragging down your score -- such as a late payment that was paid on time or a sizable sum you never borrowed. You are allowed to request a free copy of your report each year from each of the credit-reporting agencies. There are three main ones, and they each offer ways for you to have mistakes corrected.
  2. Keep a low debt-to-available-credit ratio with your credit cards. Aim to have borrowed only about 10% to 30% of the sum of all your credit limits. If you've borrowed more than that, then...
  3. Pay down your debt. This is another simple way to improve a credit score, though it can be easier said than done if you have a lot of debt. Know that many people have paid off tens of thousands of dollars worth of credit card debt -- some more than $100,000! Financially speaking, it's usually best to pay off your high-interest-rate debt first. Those credit card rates of 20% or higher can hurt you more than a 5% mortgage or car loan.
  4. Time yourself. If you're shopping for a mortgage or anything that results in your credit score being looked up, try to do so within two to six weeks. A lot of inquiries can lower your score temporarily, but less so if they're bunched together.
  5. Reduce the number of credit cards you use. Having too many credit card accounts open might dent your credit score, but ironically, the act of closing a credit card account can hurt your score, too -- if you're carrying a lot of debt relative to your credit limit. It doesn't hurt as much if your debt is relatively low. Another way to improve your credit score is to only use a few of the cards, because the number of cards with balances owed affects your score, too.
  6. Learn more and be strategic. Don't rush to close as many accounts as you can or to wipe old debts off your record. If you paid them off on time, then they're actually serving you well, boosting your score. Having old accounts is a plus, too, reflecting a long history of credit use, so use that old credit card in your drawer every year or so. It's worth getting an old debt you handled poorly off your record if you can, but note that after seven years, many of those debts should disappear on their own. Thus, if you plan to buy a house soon, you might want to time your mortgage application process so that it happens once your bad debt is off the books and your score is higher. Read up on credit to get savvier about it.
  7. Be boring. The best of the many ways to improve your credit score is just to pay your bills regularly. Having a credit report without much of interest on it -- just on-time payment after on-time payment -- is a good thing.

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Longtime Fool specialist Selena Maranjian, whom you can follow on Twitter, has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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