The words “credit score” hold a lot of weight when it comes to making big decisions as an adult. You might know it’s important, but do you know why?
1. Pay your bills on time.
Sounds simple, but people miss the due dates for bills all the time. Whether it’s your student, auto, or mortgage loan, set calendar reminders or use automatic withdrawal to make sure you get those payments in on time.
2. Get a credit card! (And pay down your balance.)
Start with smaller purchases, like paying for gas or groceries, until you’re more comfortable using it. Paying your balance off in full month-over-month is a great way to boost your score. But remember: To raise your credit score, you must first reduce your credit card debt.
3. Keep old debt on your credit report.
Some debt is actually good debt. If you have debt that you pay off consistently and spans many years, it can actually boost your credit score. Don’t remove this from your credit history!
Also, keep your credit card accounts as long as possible. If you stop using them, the account might not be reported to the credit bureaus. Try to use the card once every few months for a reasonable purchase you know you can pay off in one or two payments.
4. Request a higher credit limit.
Call your credit card company and ask for a limit increase. This’ll help lower your “credit utilization ratio.” Sounds confusing, but this is essentially your total credit card balances divided by your total credit card limits – it has a big impact on your credit score and can boost it in a big way.