Seven Tips for Improving Your Credit Score

Posted on April 01, 2022

woman checking her credit score on laptop

An important step to finding a home, whether you’re renting or buying, is ensuring that you have a good credit history. The American Bankers Association suggests the following tips to improve your credit score.

Request a copy of your credit score report – and make sure it’s correct.

Your credit report illustrates your credit performance, and it needs to be accurate so that you can apply for loans. Everyone is entitled to receive a free copy of his or her credit report annually from each of the three credit reporting agencies, Experian, Equifax, and TransUnion. To get it, you’ll have to go through the Federal Trade Commission’s website. Please note: While the report is free, you may have to pay for the numerical credit score itself.

Set up automatic bill pay.

Payment history makes up 32 percent of your VantageScore credit score and 35 percent of your FICO credit score. The longer you pay your bills on time, the better your score. Avoid missed payments by setting as many of your bills to automatic pay as possible.

Build credit through renting.

VantageScore’s scoring model, created by the three major credit bureaus, will now weigh rent and utility payment records. This will allow it to score as many as 35 million people who previously couldn’t get a credit score.

Keep balances low on credit cards and ‘revolving credit’.

Even if you pay your bills in full each month, having big balances on your credit cards can hurt your score. To increase your score, we recommend limiting your charges to 30 percent or less of your card’s limit.

Apply for and open new credit accounts only as needed.

Next time a retailer offers you 10 percent off by signing up for their credit card, reconsider. If you do need a new credit card or line of credit, don’t jump at the first appealing offer—compare the rates and fees available to you within your own bank and others.

Don’t close old, paid-off accounts.

According to FICO, closing old accounts can actually damage your score instead of helping it.

Talk to credit counselors if you’re in trouble.

Using legitimate, non-profit credit counseling can help you manage your debt and won’t hurt your credit score. For more information on debt management, contact the National Foundation for Consumer Credit.