Tips to Improve Your Credit

5 Practical Ways to Improve Your Credit Score

Looking to get that credit score as healthy as possible? Perhaps recovering from bad credit or just establishing your credit for the first time? Here are 5 ways to build your credit that will make sure your qualify for the best rate possible.

1. Automatic Bill Pay

The top factor in your credit score is payment history, and there’s no better way to be consistent than to have your payments made directly out of your checking account. You won’t forget because the bank remembers for you! Just make certain that you always have the money you need in the bank.

2. Reduce Balances

The amount of debt you carry compared to your credit limit is the number two item that affects your credit. So get rid of your highest interest debt first, perhaps by making minimum payments on other debt and putting maximum payments to those debts. A good ratio is below 30%, where your debt is only 30% of your credit limit.

3. Check Your Credit Report

Did you know you are entitled to one free credit report per year from each of the three main credit bureaus? Those are available through AnnualCreditReport.com. Once you check your credit, check for errors, and dispute any with the credit bureau.

4. Don’t Close Old Accounts

When you pay off old accounts or credit cards, don’t close them. You can stop using them (and probably should) but keeping them open will keep your credit limit up and help your credit to debt ratio.

5. Budget and Stick To It

There is no better remedy for credit score and peace of mind then making a budget and sticking to it! This will help you see where all your dollars are going, help you slow discretionary spending and make sure you can pay all your debts.

For more ideas on lowering your credit score, check with any of the credit agencies, Equifax, Experian and Transunion. Special thanks for Experian for their ideas on lowering your credit score.