Recs

2

7 Ways to Improve a Credit Score

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.

Your credit card may soon be completely worthless
The plastic in your wallet is about to go the way of the typewriter, the VCR, and the 8-track tape player. When it does, a handful of investors could stand to get very rich. You can join them -- but you must act now. An eye-opening new presentation reveals the full story on why your credit card is about to be worthless -- and highlights one little-known company sitting at the epicenter of an earth-shaking movement that could hand early investors the kind of profits we haven't seen since the dot-com days. Click here to watch this stunning video.


Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2953314, ~/Articles/ArticleHandler.aspx, 11/26/2014 2:05:04 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Selena Maranjian
TMFSelena

Selena Maranjian has been writing for the Fool since 1996 and covers basic investing and personal finance topics. She also prepares the Fool's syndicated newspaper column and has written or co-written a number of Fool books. For more financial and non-financial fare (as well as silly things), follow her on Twitter...

Today's Market

updated Moments ago Sponsored by:
DOW 17,815.65 0.71 0.00%
S&P 500 2,070.45 3.42 0.17%
NASD 4,781.11 22.85 0.48%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes


Advertisement