If you’re wondering how you can get your credit score in a better shape, we have five steps you can take to gain at least a few more points.
1. Check your credit history.
Your credit score is calculated based on your past credit behavior, collected by credit bureaus and put together in your credit report.
You can check your credit history for free using a service like Credit Karma. After you download the app and create an account, you can view your credit reports from Equifax and TransUnion. On each credit bureau’s tab, scroll down to “Show Full Credit Report” then click to view your credit information with both credit bureaus.
There’s a third bureau you should also include: Equifax. You can get your credit report directly from the Equifax website or head to annualcreditreport.com to get it for free.
Read through your accounts and balances checking to see whether you have any past due payments, high balances, or errors.
2. Pay any past due balances and collections.
Since payment history is the biggest factor affecting your credit score, past due balances are a big drag on your score. Lenders are mostly looking to make sure you’ll repay what you borrow, so falling behind on payments doesn’t paint you in the best light. Taking care of these balances will typically help raise your credit score.
3. Pay down high credit card balances.
Another factor that goes into your credit score is your credit utilization, which shows how much available credit you’re using. More specifically, your credit utilization is the ratio between your credit card balance and your credit limit. For instance, if you have a credit card with a $1,000 credit limit and a $400 balance, your credit limit would be 40%.
The higher your balances are, the more it hurts your credit score. Ideally, your credit utilization should be below 10%.
4. Get bigger credit limits.
Another way to improve your credit utilization is to get increases on your credit limits. If you’re responsible with your credit card payments, your credit card issuer may periodically raise your credit limit.
You can always request a credit limit increase if it’s been awhile since you’ve had your last increase. Some card issuers let you request an increase online, but you can always call customer service if you don’t see where to do it.
5. Open more credit card accounts.
Having more credit available to you can also help your credit score, as long as you don’t run up big balances. As you raise your credit score, you’ll also have access to rewards credit cards with excellent signup offers.
Make sure you’re applying for good credit cards—you’ll want to stay away from retail and gas credit cards. Spread out your credit card applications so that you don’t lower your credit score by having too many inquiries in a short period of time.
Get more details in our YouTube video.