How can I improve my score?

How can I improve my score?

If your credit score isn’t where you want it to be, what can you do to improve it? First, know that your score will change over time due to your financial activity and payment history. Understanding what impacts your credit score will help you navigate the path to increasing it.

Pay your bills on time.

One of the things that impacts a credit score the most is paying on time. If a payment is missed, it’s important to get it current and not exceed 30 days late. Credit reports not only track late payments, but also the number of days the payment was late. The longer the payment is late, the more the credit score will be negatively affected.

Capacity: Paying down balances.

Your credit score is impacted by the how much debt you have to the credit line available. This is called capacity. When you keep high balances, your capacity to borrow decreases and your credit score will decline. For example, if you have a credit card with a $1,000 credit limit, you should keep a balance of less than $500. It is best to try to keep your capacity under 25% to obtain a higher credit score.

Avoid closing accounts.

Canceling a credit card to avoid the temptation of using it, may sound like good idea, but it can decrease your credit score. Keeping your oldest credit line open will allow you the most points available as credit score is affected by the length of time you have had your accounts open. By closing credit line, you limit the credit available to you which will decrease your credit score. In order to obtain a higher score, it is important that you keep the accounts you already have and to keep the capacity in balance. Using credit cards for gas, or groceries and paying these off monthly will help to build your credit. This shows that you are managing your finances and living within your monthly budget.

Review your credit report for inaccuracies.

Review your credit report annually for inaccuracies. If you find an account that you don’t remember opening, payment reported past due, or an outstanding medical bill, you may be able to dispute items on your report. For more information on disputing items on your credit report visit: https://www.consumer.ftc.gov/articles/0151-disputing-errors-credit-reports.

By federal law, you can request one free copy of your credit report (though not your score) per year from each of the three major credit bureaus. The three credit bureaus are Experian, TransUnion and Equifax. You can request a free copy of all three reports from www.annualcreditreport.com. However, you do not have to request all three reports at once. By requesting one every 4 months, you can review your credit throughout the year.