Achieving a higher credit score can mean better terms on credit cards, lower rates on mortgages and less expensive premiums on auto and homeowners insurance. It can make it more likely to win approval for an apartment, and get deposits waived when setting up services like electricity and cable in a new home. Here are some tips to boost your credit score:
- Limit hard inquiries (i.e., signing up for store credit cards, signing up for overdraft protection, etc.) which may drop your score by a few points. Soft inquiries won’t cost you points (i.e., checking your credit score, comparison shopping for an auto loan, etc.).
- A rule of thumb is to use less than 30% of your available credit each month and ideally less than 10%.
- Call your card issuer to ask for a higher credit limit. If successful, the request would instantly lower your utilization.
- Keeping a balance on your cards doesn’t help.
- Closing an older credit card won’t help your score—and it might actually hurt you. If you had a positive payment history on the closed account, that will continue to count in your favor but you’ve lowered your total amount of available credit, which could raise your utilization and hurt your score. It is better to pay off any higher-interest credit cards and then keep them open. If there is an annual fee, ask the issuer to switch you to a different card in their portfolio that does not have a fee.
- Pay your bills on time.
- Review your credit report annually from each of the credit-reporting companies (TransUnion, Experian and Equifax). You can request them at annualcreditreport.com. We suggest you stagger the requests every four months between the three companies in order to keep an eye on your credit record all year long.