5 Ways to Increase Your Credit Score

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Have bad or OKish credit? Is your credit score not going up? No need to worry!

If you want to increase your credit score there are steps that you can take to greatly improve your score.

Don’t expect it to be a walk in the park or a quick fix. Reversing negative affects on your credit score will take work on your part, but the good news is, you can attain an excellent credit score. All it takes is some time and a lot of discipline.

When attempting to increase your numbers it’s most important to focus on factors that cause a higher impact on your score. Lenders want to know that they can trust you to pay them back their money.

Factors that significantly affects your score are:

• Payment history
• Credit utilization
• Length of credit history
• Mix of credit type
• Recent opened accounts

Before reading further if you don’t know what your credit score is you can always sign up for credit karma, it’s free! Credit Karma is what I use to keep monitor of my credit score. It alerts me if any accounts close, warns me if possible identity theft has occurred, and it even congratulates me when I pay off an account, which is nice boost to the ego after working so hard to pay off debt!

Things to start doing to boost your credit score

1. Pay your bills on time

We all like it when the person we let borrow money from us pays us back on time. That way we don’t have to keep calling or texting them, — basically begging them to pay up and stop dodging you. Well lenders especially love to be paid back on time too.

Lenders love it when they see a consistent reliable borrower. Missing a payment is the single most vital thing that will hurt your credit. It’s a BIG deal. Even just one late payment could lower your score up to 50 points or more. And late payments stay on your credit for up to 7 years. That’s a long time to have to keep explaining your past mistakes when trying to get approved for loans.

The best thing to do is to avoid late payments at all cost and get your bills paid on time. The more you do this the greater your score. If you have already missed a payment, then paying on time going forward will help bring your score up as well. Payment history accounts for about 35 percent of your FICO score.

Pro Tip: To avoid late payments sign up your accounts for auto pay so you won’t forget to make your payments on time.

2. Pay off any collections

Collections are overdue neglected bills that have been sent to a debt collection agency to attempt to collect the bill on the original creditors behalf. It will show on your credit report as a negative marker and can get you denied for many loans.

If you have any collections, you should focus on getting those paid off first, while still paying the minimum balance for your other debts. Throw any additional leftover money you have on your collections that way it could give you a quick bump to your credit score.

Try to avoid in the future letting other debts get sent to collections. Due to the harassment and complaints of collections being removed too slowly, — or worse sometimes not at all, it’s best to steer clear of this headache.

3. Keep your balances low

As you are paying off your debt on time, make sure to not have any maxed out credit cards. Having low balances shows lenders that you are responsible and know how to manage your money. If you have too much credit and your income can barely cover it, you are presented to lenders as a greater risk, even if you do have a pristine payment record track.

Credit utilization makes up about 30 percent of your credit score. A great rule of thumb is to only have one or two credit cards that you use on the regular, and to have these balances be less than 30 percent, — which is what FICO likes to see.

4. Don’t open any new accounts

Sometimes applying for new credit cards can be addicting. Speaking from experience, I used to get excited every time I got approved for a credit card. It made me want to see just how in good standing I was credit wise in the eyes of other lenders, so I would apply for any and every card that emailed me claiming I was pre-qualified.

Don’t fall for this trick. Although more times than not I truly was approved this also hurt my score in the long run. Though it won’t hurt your score as much as the previous points, when you are trying to increase your score it’s best to focus on the credit you already have.

Opening new accounts also reduces your credit length history. Your credit history is calculated by taking your oldest and newest accounts and dividing them by your total number of accounts. For example, if you have 2 accounts that are 6 years old and 4 years old respectively your “average age of credit” will be 5 years.

Applying for new credit could also suggest to lenders money troubles and that you need access to so much credit because of this. You want to show stable and responsible behavior, so only open new credit sparingly.

5. Don’t close any old accounts

Try to keep all of your accounts open and in good standing. Lenders like to see that you have had long and healthy relationships with other lenders. Keeping older accounts open also helps your credit utilization.

Because you will have more of a history to show be certain closing an account won’t harm your credit.

Bottom Line

Improving your credit score won’t happen overnight, but following these steps will lead you to excellent credit. Focus on baby steps and you will get there sooner than you think.

Shaniqua

Hi, I’m Shaniqua! I paid off $26,000 of consumer debt and am on the path to pay off all my student loan debt. I’m a future full time blogger who loves to write about ways you can get out of debt fast, save money, and create more income. I’m a wife and mom, and I created debt smashing to share my own debt journey and to empower others to go for their dreams. I’m passionate about helping others to succeed with their personal finances and overall life.