March 12, 2024

12 Steps to Increase Your Credit and Improve Your Credit Score

1. Pay your bills on time:

35% of your FICO score is based on your payment history. Paying on time demonstrates responsibility and has a positive impact on your score.

2. Check your credit reports:

Request reports from different agencies every 4 months through AnnualCreditReport.com. This allows you to stay aware of possible errors and changes to your history.

3. Avoid applying for many credit cards at once:

Multiple requests generate "forced inquiries" that negatively affect your score. Be selective when applying for credit.

4. Don't open too many new accounts at once:

Maintain a higher average account age, which benefits your credit score.

5. Do not cancel unused cards:

Unless there is a significant annual fee, keeping cards inactive contributes positively to total available credit.

6. Keep credit balances low:

Limit your balances to less than 10% of available credit to reduce credit risk and improve your score.

7. Variety of types of credit:

Handle different types of credit, such as auto loans and credit cards, to demonstrate your ability to manage various financial responsibilities.

8. Pay debts in collection:

Most versions of FICO ignore zero balance collections, so paying off these debts can have a positive impact.

9. Be careful with high balances:

Maintain balance in the use of credit cards to avoid negative interpretations about your ability to pay.

10. Get a personal loan to pay debts:

Consolidating credit card debt with a personal loan can improve your score and offer lower interest rates.

11. Secured Credit Card After Bankruptcy:

After a bankruptcy, rebuild your credit using a secured card linked to a savings account.

12. Consider alternative data:

Services like Experian Boost can factor in regular utility payments to improve your credit score.

Remember, improving your credit score takes time, but with patience and commitment, you can make significant progress. With sound financial knowledge and practices, you will be on your way to better credit health and greater financial opportunities.