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How can I improve my credit score?

Your credit score can determine whether you get or are turned down for a loan and the interest rate you’re charged. What steps can you take to enhance your credit standing?  

  1. Adopt good credit habits. Focus on paying off your debts on time and don’t add to your outstanding balances. Create a budget and follow it, so that you’re better able to live within your means and cut back on credit card spending.  
  2. Manage your credit cards. Having balances on fewer cards can help lower your credit score, so cut back on the number of accounts that you use. And, as a general rule, try to use no more than 30% of all the credit available to you. In other words, if you have three credit cards with a total maximum balance of $6,000, don’t carry more than a total of $1,800 in combined debt on all cards.  
  3. Leave long-standing accounts on your credit history. Even if you don’t use them often, these accounts can demonstrate that you have a solid repayment record and a longer lifetime of credit.    
  4. Clean up your credit reports. You have the right to correct or dispute mistakes, so check your reports regularly to be sure they’re correct.  
  5. Establish some credit history. If you’ve never had any credit, you can’t have a bad credit history, but lenders may be reluctant to extend credit or give you a good rate because they don’t know enough about how you will use it. The solution is to apply for a credit card and pay off your balance each month to show you’re a good risk, and to avoid having to pay any interest. If you’re turned down, get a secured credit card with which you deposit some money with the lender and can make charges up to that amount. In the meantime, you’re showing that you can be trusted to pay your balances each month.