How to Raise Your Credit Score

What do you know about your credit score?

You might know a high credit score is pretty important. That a good one can be essential to get a loan, a credit card, or even renting an apartment. But do you know how they actually work?

How Do You Raise Your Credit Score?

If your score needs a little love, here are a few key steps to take to make some money moves that your future self will thank you for:

Pay your bills on time.One of the most important factors affecting your score is your payment history. Pay your bills on time. Every time. Waiting for that past-due notice before you settle the bill may not seem like a big deal, but a delay of even just a few days can hurt your score. Late payments can stay on your credit report for up to seven years.
Keep your credit card balance low.The amount of credit you use compared to your credit limit is key. This is called credit utilization. A big purchase every now and then isn’t the end of the world. But, in general, the higher your credit utilization, the lower your credit score. Try to keep your credit utilization below 30%. For example, if your credit limit is $10,000, try to keep your balance under $3,000. And, in case this wasn’t already clear, always pay off your balances in full every month to keep that credit score high.
Another hint? Don’t forget to pay attention to your credit utilization when it comes to store credit cards as well. Those extra deals and savings can be attractive reasons to sign up for a store-specific card. But they often come with lower overall credit limits. That means you can rack up that credit utilization quickly if you aren’t careful.
Don’t close old credit card accounts.This one is a little more surprising, but did you know the length of your credit history is another factor affecting your score? If you close old credit accounts, you can shorten your credit history, which may hurt your score. Keep old credit accounts open, even if you don’t use them often.
Check your credit report.Knowledge is power. Checking in on your score over time can help you stay on track and stay motivated to reach your financial goals. Plus, regular check-ins allow you to make sure there are no errors or fraudulent activities attached to your name and account. If you find any errors, you can dispute them with the credit bureaus to have them removed from the report. When it comes to addressing mistakes, errors, or potential fraud, the earlier, the better.
Limit hard inquiries.Every time you apply for a new line of credit, it can hurt your credit scores. Limit the number of new credit inquiries on your account by only applying for credit when you really need it. Also, keep in mind that there are other reasons why a business or individual might make a hard inquiry on your report. If you’re applying to rent an apartment, signing up for a new cellphone contract, or applying for a mortgage or car loan, you might find a new hard inquiry the next time you check your account. The good news is that hard inquiries should only affect your credit score by 5 or 10 points at most, and they roll off your report after two years.

Keeping all this straight might seem like a lot at first, and in reality – it is. Achieving and maintaining a good credit score can take time and effort. Once you implement a few good habits and regularly monitor your credit report, then responsibly managing your finances will become just a normal part of your routine. As simple as brushing your teeth! Boost your credit score and improve your financial health by following the steps above and set yourself on a great path for your future.

For a quick video on what makes up a credit score visithttps://www.pbs.org/video/how-are-credit-scores-calculated-s6zjoc/.

How to Raise Your Credit Score | Blue FCU (2024)