The basics on how to improve and keep a higher credit score
First and foremost, pay your bills on time, every time!
A line of credit is only as useful to your credit score as your ability to make timely payments, so make sure that you are making your credit card payments on time.
If you are scatterbrained and prone to forget, most banks will let you set up automatic payments on your credit card, so you are guaranteed to pay on time as long as you have enough money to make the payment.
One of the most efficient ways to use a credit card is to set up automatic payments for a few household bills, then set up an automatic payment from your bank account to your credit card.
Second, get your credit report
Once per year, you are entitled to receive a copy of your credit report for free from each of the two main credit bureaus.
The number on your report will tell you whether your credit score is high, average, or poor.
The report will show negative incidences due to late or unpaid bills.
If you’re having trouble understanding your credit score, ask someone at your bank for help. Your bank representative can also help you find solutions to raise your score to where you want it.
Third, dispute mistakes
If you keep good records of your payments, getting the mistakes removed is usually a fairly simple matter of calling the debt issuer and providing some kind of proof that you made the payments on time.
If you’re friendly on the phone and have a good history with a particular lender, you might even be able to persuade them to remove one or two actual late payments from your report, especially if you can promise a large payment in the near future.
Fourth, get a new line of credit
You can’t improve your credit score if you don’t have any credit to work with.
Credit cards can be easy to abuse, but responsibly using a line of credit is one of the simplest and most straightforward ways to build a positive credit history.
If your credit score is already high, you can find a credit card with benefits, such as air miles or cash back, but even if you are simply trying to improve a poor credit score, there are options available.
Many banks offer a secured credit card as an option for rebuilding credit, which gives you a line of credit equal to a security deposit you pay to the bank.
If you use the line of credit responsibly, you can get the credit increased or get your deposit returned, though this usually takes at least a couple of years of balanced spending and repayment.
Fifth, use your line of credit wisely
Your credit score is not just calculated based on whether you pay your debts and bills on time.
It also takes into account how much debt you have, and how much of your available credit you are using.
The more credit you use, the greater a financial risk you are, so try never to use more than 30% of your available credit at any given time.
It’s easier to repay and better for your score when your creditor reports it. It will also leave you plenty of credit to use in case a genuine emergency arises.