You can’t improve your credit score until you learn what your score is. There are several websites that will give you one free credit score per year (the ability to obtain a copy of your credit report once per year is mandated by United States law). If your score is above around 725, keep doing what you’re doing… (you probably won’t get added benefits if your score goes any higher) If your score is lower than 725, read on.
On your credit report, there is a list of every open (and closed) account you have. If you have “open” accounts that you don’t recognize or don’t use anymore, try to close these accounts. The credit score website should give you a phone number to call for each account. Open, unused accounts will only hurt your score. In the eyes of creditors, it seems as if you have these accounts and don’t use them because you don’t trust yourself enough to use them in a sensible way without racking up tons of debt.
Accounts open for a short period of time (less than three years) will lower your score. If you keep transferring your balances from one credit card to another (people often do this in search of lower interest rates for a 6-month introductory period), you’re hurting your score.
Paying only the minimum payment on a credit card stunts your credit score. Work toward paying off credit cards with high interest rates first to improve your score. Don’t use any cards unless the money is already in the bank. A credit card is a convenience so you don’t need to carry cash – it isn’t for people without cash.
Finally and most importantly, paying bills on time every month is the biggest step to improving your credit score. This is the first thing banks look at when you are applying for a loan. Obviously, if they give you a loan, they want you to pay it back each month plus interest. This is how they make money. But if they see that you don’t usually pay loans back in a timely manner, they’re less likely to offer you a loan.
Try to have several different types of credit; having credit cards, a mortgage, and a line of credit shows diverse credit – a plus when applying for a loan.
After a bankruptcy or foreclosure, it can take as much as ten years for the event to be removed from your credit report. Have patience, and don’t let the past forecast the future.
Don’t leave a credit card account open unless you’re using it. If you don’t use it, it will look like you don’t trust yourself enough to use it wisely.