Because of the way credit scores are calculated, some actions you take will increase your credit score better than others. In general, paying your bills on time and meeting your financial responsibilities will increase your credit score the most. Owing a reasonable amount of money and being able to repay it will show lenders that you take your finances seriously and pose little threat of lost money. There are a few tips that, more than any other, will increase your credit score the most:
Tip #1 – Pay your bills on time.
One of the best ways to increase your credit score is simply to pay your bills on time. Prompt payment of your debts is the simplest way to show lenders that you take your debts seriously. Every lender desires to be paid in full and on time.
Tip#2 – Never have excessive credit.
By having numerous lines of credit or huge debts, you will make a poor credit risk because your appear to be very close to overextending your credit.” This simply means that you may be taking on morecredit than you can comfortably pay off. Even if you are paying your existing bills regularly, by taking on too much debt load lenders know you may eventually have a harder time paying off your bills. By borrowing in this fashion you will not increase your credit score.
Tip #3 – Pay Down Your Debts
If you have a lot of debt, your credit score will suffer. Paying down your debts to a minimum will help to increase your credit score. For example, if you have a $1000 limit on your credit card and you regularly carry a balance of $900, you will be a less attractive credit risk to lenders than someone who has the same credit card but carries a smaller balance of $100 or so. Reduce the percentage of your total available credit by paying off your largest debt first to seriously begin to improve your credit score.
Tip #4 – Have a range of credit types
The types of credit you have are a factor in calculating your credit score. Lenders generally like to see that you can handle a range of credit types well. Having some form of personal credit – such as credit cards – and some larger types of credit – such as a mortgage or auto loan -and paying them off regularly is better than having only one type of credit.
This is the absolutely best way to increase your credit score.