6 Ways to Improve Your Credit Score

Your credit score affects so much of your life: your ability to get a home, a loan, rent a car, get a job, get a credit card, and more. A good credit score can even lower your bills or score you some lower interest rates.

So how do you improve your credit score? Here are 6 easy tips to get you started:

Pay Your Bills On Time

This is the Golden Rule of improving your credit score. It’s the simplest to do, it’s the most effective, and it’s one of the easiest to slip up on.

If you forget to pay your electric bill, your power may get turned off. But it’ll also take a chunk out of your credit score.

Do whatever you need to do in order to get all your payments squared away on time, and in full! Set up auto-payments, set alarms, and write in on your calendar a thousand times. Just get everything paid on time, and your credit score will slowly but steadily improve.

Get Out of Debt

Debt is one of those nasty things that keeps your finances at a standstill. It makes it almost impossible to build up any real savings, and you won’t be able to improve your credit score until you clear up those major debts.

Get out of the most interest-heavy debts first. Even if you can’t make significant progress at totally eliminating your debt, if you continue to make all your debt payments on time, your credit score will reflect that commitment and you’ll see it improve.

Rethink the Credit Card

Credit cards are one of the shortest routes to debt and the subsequent bad credit score. But credit cards can also be one of the quickest ways to build up and improve your credit score if you lack positive financial history.

When deciding whether or not a credit card is a good way for you to improve your credit score, you should be very honest with yourself. Have you successfully managed a credit card in the past? Do you think you’d overspend your limit?

If you’re even a little concerned that you might not stay on top of your credit card, then it’s probably best to just stay away and improve your credit score the slow and steady way.

Rethink Your Credit Limit

Is your credit limit reasonable? If your credit score is consistently in trouble and you often find yourself struggling to maintain your credit card balance, your credit limit may need to be adjusted.

Keep a close eye on how you utilize your card, and how much you’ve been charging versus how much you should be charging. It might be time to make some changes, and see how rethinking your credit limit can affect your credit score.

Check and Double-Check Your Credit Report

Credit bureaus make mistakes. Those mistakes could be damaging your credit score without real cause. By reporting these mistakes to the credit bureau, you can get it taken off your credit report and your credit score will instantly bump up to reflect the corrections.

Sign up to receive regular credit reports. You can at least one for free annually… so use it! Go over anything that could be damaging your credit score and check to make sure everything looks accurate.

Finding those little mistakes are the credit score equivalent of finding spare change in the couch cushions. Maybe it won’t make a huge difference. Or maybe you’ll find a $20 bill that got lost under a throw pillow. You might as well double-check that credit report!

Old and Controlled Debt is Good Debt

Just like “good cholesterol” versus “bad cholesterol” and saturated versus unsaturated fats, a little bit of the right kind of bad stuff can be… good. Your mother told you to take ‘all things in moderation,’ and debt can be one of those things.

For example, if you have a small amount of credit card debt from a line of credit that you’ve had for years, and you’re consistently managing solid payments on it at regular intervals, that older example of well-maintained debt can actually show you in a favorable light. Maybe you have a credit card that you paid off a long time ago, but you never actually closed out the card even though you rarely, if ever, use it. That’s an example of good debt. People like lenders or credit providers view an example of old and controlled debt on your credit reports to be a positive sign that you’re good at managing your payments and keeping debt in check.

That being said, there’s a very fine line. You don’t want any other debts lingering on your credit report if you want to improve that credit score.

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