If you’ve never actively worked to improve your credit, a credit score might seem like black magic. You may understand that scores run from 300 to 850, but that’s where most people’s knowledge ends. When you don’t understand the forces at work, it’s easy to assume you have little immediate control over where you land on that spectrum.
In reality, your credit score is based on very real, very measurable criteria – and you absolutely have the power to change it. In fact, most consumers are in a position to improve their credit with very little effort.
Here are three easy of the easiest ways to improve your credit score:
#1 Change Your Credit Limit
One of the biggest factors in determining your credit score lies in how much of your current credit balance you’re using. Every credit card has a credit limit or a maximum amount you can spend. Your credit score will take a hit if your credit balance is more than 30% of the available limit.
There are two ways to decrease your credit utilization ratio: either pay off part of the balance or increase your credit limit.
For example, if you routinely have a $ 5,000 balance on a card with a $ 10,000 limit, you’re using 50% – much too high. However, if you spend $ 5,000 on a card with an $ 18,000 limit, you’ll have a 27% ratio. This should improve your score.
Most credit card issuers will happily increase your limit if you’ve been a loyal customer. It’s as simple as calling and asking for a higher limit.
#2 Set Up Autopay
Whether or not you make payments on-time is the single most important element in the calculation of your credit score. As long as you pay your bills on or before the deadline, your score will improve. Unfortunately, it’s common for customers to neglect this.
The easiest fail-safe is to set up autopay, so your bill will be automatically charged before the deadline. Almost every bill you have, whether it’s a credit card bill or car loan, offers autopay. Some student loan providers even give a small deduction on your interest rate for doing it.
If you don’t want to set up autopay or want to confirm that every payment goes through, use the Mint bill pay reminder. You’ll get a notification 10 days before the bill is due, so you’ll never see another late payment again.
#3 Keep Old Accounts Open
This is probably the easiest piece of advice on the list. Your credit age makes up 15% of your credit score, and the only way to increase the age is to keep old accounts open and avoid opening new ones. Every time you open a new credit card or take out a new loan, the average age decreases. In other words, if you just sit tight your score will likely increase on its own.
Zina Kumok is a freelance writer specializing in personal finance. A former reporter, she has covered murder trials, the Final Four and everything in between. She has been featured in Lifehacker, DailyWorth and Time. Read about how she paid off $ 28,000 worth of student loans in three years at Debt Free After Three.
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