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Easy ways to improve your credit score

Establishing good credit is necessary in today’s world. If yours isn’t as high as you’d like it, there are some simple things you can do to raise your score.

Woman going over financial statements

Credit scores range from 300 to 850, with a “good” score being anything above 720. The higher your credit score, the less you’ll pay in interest on high-priced items such as mortgages and automobiles. While your score won’t go up overnight, there are some things you can do to get your score where you’d like it to be. Remember, credit scores take into account present actions along with past actions, so be willing to work at this for a good, long while. Here are some easy ways to improve your score.

Get a credit card

Some people stay away from credit cards in fear that they will ruin their credit. This is true if you max them out, but if you keep the balance low (less than 30 percent of the limit) or paid off, it will in fact help your score. You must have credit in order to build credit.

For more on credit cards, check out this debt breakdown: Is being debt-free a realistic goal? >>

Pay bills on time

This one seems easy enough, but so many people pay their bills late thinking it’s no big deal. This is a huge deal! Paying late shows your lenders that you’re not a good borrower; in other words, you’re a risk and your credit score will go down. On the other hand, paying on time shows you are of little risk to your lenders, making your score increase. Paying late also gets you in the habit of paying late, so break that now and watch your score improve over the next several months.

Don’t use multiple credit cards

One of the things your credit score takes into account is how many credit cards with balances you have. The more you have, the more it will hurt your score. Pay off all those small balances and choose one or two credit cards you will use — this way you won’t be harming your score with all those unnecessary small balances.

Don’t close accounts

Once you pay off those small balances, keep the accounts open instead of closing them. Open accounts that are paid off and inactive will help your overall score due to the weighted average of the credit score formula.

And finally — a trick that works

This trick is one of the oldest around and known to quickly improve your credit. First, get a secured credit card, or simply put — a prepaid credit card. Once received, get a cash advance of up to 70 percent of the card’s limit. Get two more secured credit cards and do the same thing. Second, open a separate checking account for the cash advance you received off of the third card. This will be used to make the monthly payments on all three cards. Your credit score will increase significantly over the next few months due to having three new credit cards with a perfect payment history.

More on credit

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Avoiding credit card fraud

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