Here are 5 ways to improve your credit score
1. Pay Your Bills on Time
Your payment history accounts for the largest portion of your credit score, making timely payments essential. Late payments can stay on your credit report for up to seven years, significantly lowering your score. Set up automatic payments or reminders to ensure you don’t miss due dates. Even if you can’t pay the full balance, making at least the minimum payment on time helps maintain a positive credit history.
2. Reduce Your Credit Utilization Ratio
Your credit utilization ratio—how much credit you’re using compared to your total credit limit—plays a major role in your credit score. Aim to keep this ratio below 30% to show lenders you’re managing your credit responsibly. For example, if your credit limit is $10,000, try to keep your balances under $3,000. Paying down outstanding debt or requesting a higher credit limit can help reduce your utilization ratio.
3. Avoid Applying for Too Much Credit at Once
Each time you apply for new credit, a hard inquiry is recorded on your credit report, which can temporarily lower your score. Multiple inquiries in a short period signal to lenders that you may be financially overextending yourself. Be selective about applying for new credit and only do so when necessary. If you’re shopping for a loan, try to complete all applications within a short time frame, as some credit scoring models group similar inquiries together.
4. Check Your Credit Report for Errors
Errors on your credit report, such as incorrect account details or fraudulent accounts, can drag down your score. Regularly review your credit reports from the three major bureaus—Experian, Equifax, and TransUnion—to identify inaccuracies. Dispute any errors immediately by contacting the credit bureau and providing documentation to support your claim. Correcting errors can result in a quick boost to your score.
5. Maintain Long-Standing Accounts
The length of your credit history contributes to your score, so keeping older accounts open can be beneficial. Even if you no longer use a particular credit card, keeping it active (with occasional small transactions) helps maintain the age of your credit history. Closing old accounts can shorten your credit history and increase your credit utilization ratio, both of which can hurt your score.
By consistently following these strategies, you can steadily improve your credit score over time, making it easier to achieve your financial goals. Good credit habits also create a foundation for long-term financial health.
Speak to a professional mortgage broker to learn more information on how to improve your credit score.