There are a lot of rumors circulating when it comes to credit scores and how to improve them: Do you really need to pay a credit repair company to increase your score? (No.) Will getting married help raise it? (No.) Will making on-time payments every month give it a boost? (Yes.) If you want to make your score better, perhaps because you plan to take out a sizable loan in the future, consider these strategies.
1. Erase the dings.
One technique, which is arguably a bit sneaky, is to dispute old, negative information on your credit history in hopes that the original creditor won’t respond and the mark will be removed. A more legitimate approach is to contest any entries that are incorrect or a result of identity confusion.
2. Request a credit line increase.
Increasing your credit line will improve your credit utilization ratio, which is the percentage of your credit limit you’ve used, and help your credit score. Many credit card issuers give you the option to request a credit line increase without a credit inquiry. Take it. If they want additional information and plan to pull your credit, cancel the application, because a hard credit check will hurt your score.
3. Pay off debt.
If you’ve already tried to make the denominator of your credit utilization ratio bigger, it’s time to focus on making the numerator smaller. Paying off debt is the best way to do that. By lowering your total balance owed, you lower the total amount of interest you pay, and improve your credit score at the same time.
4. Charge less.
The credit bureaus don’t take into account whether you carry a balance when they calculate your credit utilization ratio. They take your statement’s closing balance, even if you pay it in full that same period. If you want to give your score a boost, use your credit cards less and lower your statement balances.
If you have multiple cards from one issuer, consider consolidating the newer cards into the older cards. You can do this by calling customer service and asking if they offer this, but only do it if they keep the total credit limit the same. The goal of this move is to increase the average age of your revolving lines of credit without reducing your total credit limit, which will affect your credit utilization ratio.
6. Check your credit report.
Review your credit report for any errors and omissions. If you have a negative mark that isn’t rightfully yours, dispute it and get it removed. If you have an account that’s not listed on your report, make sure it’s added. You can check your credit report for free once a year through AnnualCreditReport.com.
7. Don’t be late.
Making on-time payments each month is key to staying on top of your debt and maintaining your score. It might sound boring, but it’s a tried-and-true method.
8. Be patient.
If you have a major black mark on your credit history – if you’ve filed for bankruptcy, for example – it will take time to put some space between that event and your score. In most cases, it takes about seven to 10 years to erase the negative effects of a bankruptcy filing from a credit report.
9. Don’t become a victim.
Credit scores can be ruined quickly if a thief steals your identity and starts creating new accounts and building up debt in your name. To reduce the chances of becoming a victim, review your account statements carefully each month to spot any errors and alert your card issuer if you see any problems. Avoid sharing personal details on social media that would make it easier for someone to hack into your accounts, too, and use hard-to-guess passwords on financial accounts.
10. Maintain accounts in your own name.
If you’re a college student still spending mom and dad’s money, or you’re an unemployed spouse with accounts in your partner’s name, it’s time to set up some accounts in your own name. That will give you the chance to build your own credit history. Most accounts with monthly bills, including for utilities or credit, can help fill out your credit history.
Copyright 2015 U.S. News & World Report