Whether you’re building credit from scratch or rebuilding after bad habits have taken a toll, there are plenty of things you can do to improve your scores. The most important thing is paying your bills on time. Scorekeepers like FICO and VantageScore, the most popular scoring models used by lenders, consider your payment history to be the most influential factor in a credit score. It signals to lenders that you’re responsible and can repay debt. If you’re struggling to pay your monthly bills on time, try putting them on autopay. This will ensure you never miss a payment and won’t see your score take a hit if you do accidentally slip up.
Another way to increase your credit score quickly is to reduce the amount of outstanding debt you have. This will bring down your credit utilization ratio, which is the percentage of credit that you’re using compared to the total amount of available credit. Keeping balances low on your credit cards and other revolving accounts will also help your scores. You can do this by coming up with a plan to pay down your revolving debt, or by switching to installment loans such as mortgages, car loans and student loans.
Your length of credit history is the next most influential factor in your credit score, and the longer you’ve had a credit account, the better. This is why it’s a good idea to keep your oldest credit card open if you can. Also, don’t close unused accounts, as this can be viewed negatively by credit issuers and may lower your scores.
The third most important factor in a credit score is your credit mix, which includes the types of credit you have (credit cards, personal loans, auto loans and mortgages). This can help to raise your score by showing that you’re responsible with different kinds of credit and that you can handle a variety of financial obligations. However, it’s important to apply for new credit sparingly. Opening multiple new credit accounts in a short period of time can cause a negative impact on your scores.
Finally, it’s a good idea to review your credit reports on a regular basis and to check for errors. Inaccuracies can cause your score to go down, and reporting them to the credit bureaus will fix them. It’s also a good idea to check your credit report on an annual basis or before applying for a loan, such as a mortgage or a car loan, so you can address any errors right away. credit score improvement