One study found that 26% of Americans were unaware of key strategies to raise or maintain their credit scores.
There are a number of things individuals can begin doing today to potentially improve the measure that lenders use in approving credit.
Five Tips for Raising Your Credit Score
- Eliminate small balances. Your credit score can be affected by how many credit cards have balances. A charge of $100 on one card and a charge of $50 on a second card may be worse than a $150 charge on a single card.
- Watch actual use. One major factor in your credit score is the relationship between how much revolving credit you have and how much you use. For instance, if you have a $10,000 credit line and use a substantial portion of it, it may adversely affect your score, even if you pay off the balance each month. The general rule is that the less you use of your available credit line the better. A useful target may be 10 percent of your maximum revolving credit line.
- Use an old card. An old, unused card may no longer be reporting to a credit agency your good payment history. By using the old card, and paying the balance, a good credit report may be provided to credit agencies.
- Pay on time. Late payments can hurt your credit score. If you are forgetful, set up payment reminders for yourself. Some banks can send you an email or text message when payment is due.
- Take out an installment loan. Taking out an installment loan and paying back on a timely basis may raise your credit score as you begin to add positive history to your credit rating.
If you are interested in learning more about your credit score, remember you are entitled to a free report from each of the three credit bureaus every 12 months through annualcreditreport.com.
