You make payments on time, knowing that late payments may negatively impact your credit score. You pay off your balances at the end of each month. You make an annual check of your credit report to make sure it’s accurate. So why does it feel like it’s impossible to improve your credit score?
Well, credit scores are based on credit histories that, for the most part, date back as far as seven years (longer if the information pertains to bankruptcy), so improving them takes time. 1 Here are tips to help you with your score:
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1. Don’t over-extend yourself.
Maxing out a credit card is a bad idea, even if you can afford to pay the balance at the end of the month. One of the factors that goes into your credit score is credit utilization, or how much of your available credit you use. 1 Consequently, it’s best not to use too much of your credit all at one time. This goes not only for those who carry a balance from month to month, but even for those who pay off their balances at the end of each month.
2. Don’t apply for credit you don’t need.
Some credit card and revolving loan offers seem too good to pass up: No interest for years on end; thousands of frequent flyer miles; or huge discounts. But remember that when you apply for new credit, a potential new creditor checks your credit history, and too many of these inquiries may pull down your score. It could be especially damaging to apply for a lot of new credit over a short period of time. 2
3. Don’t rack up a lot of little balances.
Having a $50 tab here, and a $100 tab there, may be a drag on your score, too. Experts at Bankrate.com recommend using one card—rather than carrying a lot of little balances on multiple cards—when it comes to scoring your credit history. 3
4. Don’t shuffle the deck.
Many credit card companies promote balance transfers, so you may feel encouraged to shift debt to a lower rate. Sometimes that’s beneficial for your credit if the lower rate means you’re more likely to make your minimum payments on time. But it’s usually better for your credit to pay off your debt than move it around. 4
5. Don’t disrupt the cycle.
Charging more than usual or paying less than usual may be interpreted as signs of financial distress. Maintaining a more-stable history is likely a better route.
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6. Don’t close old accounts.
You don’t need to close an account just because you’re not using it. If you’ve paid off an account in full and it shows a zero balance on your credit report, that’s not necessarily a bad piece of history for your file. It may even be what lenders like to see: available credit that you do not have to use because you’re financially solid.