There are a number of ways you can improve your credit score and these begin by having some form of credit. Generally you won’t have much of a score if you don’t use one or more lines of credit, but this shouldn’t be an encouragement to have lots of different credit cards or credit accounts. If you’re beginning, start off by having one or two cards at most and work on the behaviors that will improve your credit score.
If you have not paid bills in a timely fashion in the past, work on consistently paying your bills on time. This is one of the best ways to improve your credit score. If you have trouble remembering to pay on time, consider setting up monthly payments deducted from your bank account. Also note that it looks better to pay more than the minimum monthly payment. How quickly you get rid of any debts you owed can improve your credit score.
It’s also important not to use all your credit. Some financial experts say you should have use no more than 30% of your available credit at any given time, but don’t think that opening new cards or accounts to give you more available credit will help. Generally if you open a ton of new cards at once, this may viewed as risky behavior and won’t increase your score. Instead, stick with a couple of cards and make sure that you don’t owe more than 30% of your total available credit on these cards.
If you have outstanding bills or bills that are in default, you need to begin making reasonable payments on these. However, once your bills go into default, they may show up on your credit report for several years, up to seven years in most cases, even after they've been repaid. On the other hand, as long as you don’t pay on these accounts, you will probably never have good credit. There are some circumstances where you may hit financial hardship and not be able to make a full payment. Talk to your creditors about how to address this; some creditors may be able to give you an extension and not report your failure to make a timely payment.
Another thing to do that may improve your credit score is to keep track of what is being reported on your credit report. Sometimes something is inaccurately marked and can reduce score. Work with the company that has failed to accurately record your payments to correct this.
Finally, don’t forget that credit comes in lots of forms. Missed payments to doctors or to lenders of student loans can affect your credit score adversely. Adopt a pay as you go strategy, especially when it comes to things like medical bills, so you don’t accidentally miss meeting your obligations there. With student loans, be certain you are paying on time, and remember that many of these may be eligible for renegotiation of payments or temporary deferment if you can’t make payments at the moment. Talk with your lender about options that may help instead of letting these accounts go into default.
A final thing that can indirectly improve your credit score is to make sure your credit cards offer you low interest rates. Higher interest rates mean more money that you will have to repay, and if you’re on a budget this can be challenging. By finding companies that offer competitive rates, each payment you make will pay off more of your balance, instead of being devoted to interest payments. The more of your loans you can pay off in a timely fashion, the more your credit score is likely to improve.
