1 First things, first: know your credit score and check it regularly
There are many websites that offer free credit score reports. Here is a link to get your free credit report at Experian.com. Whether you’re trying to raise your score or maintain your top-notch report, here are ways to see an immediate change in that magic number.
2 Beef Up Your Thin File
Your file may be “thin” for a variety of reasons: maybe you’ve never had credit; maybe you’re new to credit or are re-establishing credit.
In the case of credit, thin is not something you want to be. If you’re hoping to apply for credit soon, take some steps to build your credit to a creditworthy state before you do so.
A secured credit card will help to bulk up a thin credit history. Although a secured card requires a deposit, this type of credit card can be helpful for people who otherwise can’t open a line of credit. When used responsibly, secured cards can give you an opportunity to build or rebuild your credit.
Some other things that can fatten your thin file are personal loans, auto loans, and a mortgage.
3 Before You Do Anything Like Adding A New Credit Card, Unload Debt
This is the ultimate tried-and-true credit score booster. Unloading debt increases your score by reducing your overall debt and lowering your credit utilization rate (for credit cards, at least). Before you add a new credit card, increase your credit limit or juggle balance transfers, focus on paying off your debt. Your credit score will thank you.
4 Find the Right Credit Card
A lot of credit card issuers are increasing the number of pre-approved offers they mail out. One of the ways that your score is calculated is by calculating your credit utilization rate – how much credit you use compared to the total credit line you could use.
Opening a new card will often have a positive impact on your credit score because it increases your total available credit. Sift through cards to find one with favorable terms, a low interest rate, and no annual fee. Remember: each credit card application results in a hard inquiry that temporarily lowers your credit score for four-to-eight weeks, so be selective about applying to cards with high approval rates for your credit score range.
5 Extend Your Credit Limit
If you don’t like the idea of managing another credit card, ask your current credit card issuer for a credit line increase on your existing card. Like getting a new card, this will lower the percentage of credit you’re using compared to how much you could use if you don’t increase your spending to match.
Issuers are more likely to increase credit to good customers, so choose the card with which you’ve had the cleanest and longest history. Then just call up and ask, reminding the rep that you’ve been a dedicated customer for a long time.
Note: Requesting a credit line increase also requires a hard credit inquiry, so prepare yourself for a temporary hit to your score.
6 Make It Automatic
Just one late payment can damage your credit score 20 points or more, so take precautions. Set up automatic payments on installment loans that charge the same amount each time and create calendar reminders for your credit card and other bills.
7 Actually Use Your Credit Card
If – and only if – you never spend more than you have and pay your bills in full every month, pay with a credit card. In addition to providing perks like insurance, rewards, and the ability to dispute charges, this is also a powerful tool in building credit. The key is moderation: Using too much credit or maxing out your card hurts your score, but regular, responsible use actually helps it.
8 Clean Up Your Credit Report
According to some statistics, 80 percent of consumer credit reports may have an error or inaccuracy that can cost 5 to 50 credit points. Check your credit report for errors. Once the mistakes are wiped from your history, your credit score will show the effect within a month.