Staff Contributor

Your credit score is important. Not only does it help determine whether you get a loan and what terms you get, but it can be a factor in other financial decisions, such as insurance and utility rates. Getting a good credit score takes time and work, and following these tips will help achieve it.

1. Pay on time

Among the most important factors in your credit score is your payment history. Paying your bills late will cause your credit score to drop. If you are a chronic late-payer, it will be impossible to keep your credit score high.

2. Keep accounts out of collections

While paying late is bad for your credit score, allowing accounts to default and enter into collections status is catastrophic. Make sure you bring past due accounts current as soon as you can.

3. Keep your debt levels low

A high amount of debt, especially in relation to how much credit you have, can lower your score. Keep your debt, especially credit card debt, to a minimum.

4. Don't open too many accounts

Opening new credit can ding your credit score by a few points, although the effect does not last long. Opening new accounts also can signal to potential lenders that you plan to take on more debt. Therefore, it is important not to open accounts you don't need.

5. Don't close accounts

Closing accounts with negative credit information won't erase that information, and while closing accounts with positive information will lessen the effect of that information over time.

6. Check your credit report

You should check your credit report with all three credit bureaus annually to look for incorrect information.

7. Correct errors

Your credit score is based on the information on your credit report, so incorrect negative information could wrongly lower your score. Make sure to dispute incorrect information in writing as soon as you find it.

8. Keep a good mix

Having more than one type of credit can help boost your score. If you don't have credit cards, you should get at least one and use it occasionally. It is also good to have an installment loan on your credit record.

9. Use all your credit

Having open credit card accounts does your score no good if you don't use them. Use any card you have at least once or twice a year to keep the account from being involuntarily closed or your credit limit lowered.

10. Pay more than the minimum

While you are only required to pay a minimum payment each month, paying more than that will lower your debt, which can improve your score.


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