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Check your credit report for mistakes
One of the best things you can do to improve your credit score is to check your credit report for mistakes and dispute any errors you find. You’re entitled to a free credit report from each of the three major credit reporting agencies — Equifax, Experian and TransUnion — once every 12 months. You can get your free reports at AnnualCreditReport.com.
If you find any mistakes, file a dispute with the credit bureau and include any documentation you have to support your claim. The bureau has 30 days to investigate and must correct any errors it finds.
If you find mistakes on more than one report, you’ll need to file a separate dispute with each bureau. And if you have a solid history of paying your bills on time, you can ask the credit bureau to add a “good payment history” statement to your report.
Pay your bills on time
One of the easiest ways to improve your credit score is by paying your bills on time. This includes credit card bills, utility bills, mortgage payments, and any other recurring payments you might have. Even if you can’t pay the full amount due, as long as you make the minimum payment by the due date, you’ll start to see your score improve.
Keep your credit card balances low
While your credit score is important for qualifying for loans and credit cards with the best terms, it’s also important for things like getting a good car insurance rate. In fact, your credit score can be one of the biggest factors in how much your car insurance costs.
Fortunately, there are some things you can do to improve your credit score, and one of the best things you can do is to keep your credit card balances low.
One reason that keeping your credit card balances low is so important is that it’s one of the things that lenders look at when they’re considering you for a loan. They want to see that you’re not using too much of your available credit, and if you are, it could make them think twice about lending you money.
Another reason why keeping your credit card balances low is so important is that it can help you avoid paying interest. If you have a balance on your credit card, chances are you’re paying interest on that balance every month. The higher your balance, the more interest you’re paying. So by keeping your balances low, you can save yourself some money each month.
Finally, keeping your credit card balances low is also important for your credit score. Your credit score is partly determined by how much of your available credit you’re using, and if you have a high balance on your cards, it will negatively impact your score. So by keeping your balances low, you can help improve your score over time.
Use different types of credit
Credit mix is accounts for 10% of your score—the types of credit you have (mortgage, credit card, auto loan, etc.) show creditors that you’re able to handle different types of financial obligations. A diversified mix of credit will help your score, but opening several new accounts at once could actually lower it in the short term. So while you don’t need to have one of each type of account, it is important to have a healthy mix to improve your score over time.
Monitor your credit report
Your credit score is a number that represents your creditworthiness — the higher the number, the better. An excellent credit score is one that is in the 800s, and a poor credit score is one that is in the 400s. If your score is in the 800s, you’re in great shape and will probably be able to get approved for any type of loan or credit card you apply for. If your score is in the 400s, you’re going to have a much harder time getting approved for loans and credit cards, and you may even be denied.
The first step to increasing your credit score is to monitor your credit report. You can do this by requesting a free copy of your report from each of the three major credit bureaus — Experian, Equifax, and TransUnion — once every 12 months. When you request your report, be sure to request that each bureau include your FICO® Score 8 along with your report.
Once you have your reports, review them carefully to look for any errors or inaccuracies. If you find anything that isn’t accurate, dispute it with the appropriate bureau — they should be able to help you get it corrected.
In addition to monitoring your credit report, it’s also important to monitor your credit utilization ratio. This is the percentage of available credit that you’re using at any given time, and it’s one of the most important factors in determining your credit score. You should aim to keep your utilization ratio below 30%, and ideally below 10%.