Credit Score


Your credit score is an important part of your identity. Not only does a credit score determine whether you can get a loan or credit card and what kind of interest rate you get, it can play a role in a number of other financial situations. Your credit score may figure into getting an insurance policy, renting an apartment, signing up for utility service or even getting a job. If your score is lower than what you think it should be, there are ways to raise it.

1. Check your credit report

Black marks on credit usually start with something negative on your credit report, which is why it is important to check it regularly. Most negative entries on credit documents are legitimate, but errors do occur, and studies have suggested as many as 25% of credit reports have errors on them. Most of these errors are minor things that don’t affect your score, but some errors, such as reporting an account as past due when it is current, will hurt you. You are entitled to free credit reports from the three major bureaus each year, and if you spread them out, you can check your credit every few months.

2. Pay your bills on time

One of the most important factors for the quality of your credit is whether you keep up on your bills. Constant failure to pay them on time will eventually hurt your score, especially if you get more than 30 days behind. If you have a history of late payments, making a concerted effort to start paying on time can help you improve your score. Set any bill that is the same amount each month on auto pay. For your other bills, set yourself reminders on your phone or computer calendar.

3. Pay down debt

One of the best ways to improve your score is to pay down your debt. How much debt you carry can account for as much as one-third of your score, so carrying too much can really hurt you. Aim to get your total debt load to less than 30 percent of your available credit. Paying down debt can have other benefits beyond just improving your score, including lower your monthly payments and freeing up more of your budget for other things.

4. Bring past-due accounts up to date

If you have accounts that are delinquent, bringing them up to current status will help to improve your credit. Concentrate on accounts where you have a realistic chance to get them current quickly. Also, make sure you don’t neglect any other accounts and allow a new one to become delinquent while trying to catch up.

There is a wide range of credit scores out there. By following these tips, you can help to move yours into a higher tier. With a higher score, your financial situation should be on track to improve.