Improving Your Credit Score

Your credit score is one of the most important parts of your overall financial picture. A high FICO credit score can open doors: It makes it easier to attain loans, credit cards, and to secure lower interest rates.

If your credit history has a few blemishes, you might have a low credit score, which can make it harder to attain credit, loans or favorable interest rates. A high credit score is around 700 to 850, and a low score is around 300, according to the Federal Trade Commission. A good rule of thumb is that a score above 670 is good.

Luckily, there are ways you can improve your score. It doesn’t happen overnight, but with persistence and patience, you can recuperate your credit score by following these tips.

1. Always pay bills on time. Payment history is the single largest factor in determining your credit score. Stay up to date on all your credit card bills, mortgage payments, and other bills to bolster your score.
2. Avoid opening new lines of credit. It can damage your credit if you open too many new credit card accounts in a short period, according to Debt.org.
3. But don’t be too quick to close old credit cards. Even if you hardly use your first credit card, leave the account open. Your length of credit history impacts your credit score; FICO awards a higher score to people with longer credit histories. It’s wise to keep your oldest account open, even if it sits unused.
4. Be mindful of your credit utilization. The more of your credit you use, the more likely your credit score is to suffer. That’s because your credit utilization rate—the amount of credit you use divided by the amount of credit you have available, according to Experian—also plays a role in calculating your credit score. Aim to use no more than 30 percent of your total available credit. You can accomplish this by simply using less credit, or by asking for higher credit limits on your existing accounts.
5. Correct errors in your credit report. Request your free credit report—you’re entitled to one every 12 months. Then, check for errors, and follow FICO’s guidelines for identifying and disputing mistakes. Common issues include clerical errors and missing account information, which can negatively impact your credit score. If you find errors, contact the credit bureau. These corrections can ultimately help increase your score.