With lots of lenders tightening up on credit, it’s more important than ever to maintain the highest credit score possible. A credit score of 650 or more is ideal for getting the lowest interest rates and the best loan deals, but increasing any score can help you cut credit costs.
If your number isn’t as high as you’d like—or need—it to be, here are five tips for boosting it without spending an extra dime.
- Pay your bills on time–always. A late credit card payment now and then may not seem like a big deal to you, but lenders will take off points for each incident because they consider it a sign of possible financial problems.
- Keep using the same credit card and loan accounts to build up a history of timely payments, rather than switching cards and lenders frequently. The longer you have maintained the same active credit accounts with on-time payments, the better your credit score.
- Monitor your credit report regularly to make sure it’s accurate, and request that any mistakes be corrected as soon as possible.
- Track how much debt you have compared with how much is available to you. The less of your available credit that you’re actually using, the better it looks on your credit report. For example, if you have $20,000 in credit available through your credit cards and a home equity line, and you have outstanding balances adding up to $10,000, you’re using 50 percent of your available credit. Experts advise keeping your credit use below 35 percent to maximize your credit score.
- Finally, don’t apply for more credit than you could afford to pay back. Every time you apply for credit of any kind, a “hard inquiry” is generated at the credit reporting services, which can also decrease your credit score slightly.