Improving Credit Scores

How You Can Improve Your Credit Score

Credit scores fluctuate based on how you manage your available credit. Steps you can take to improve your credit score include:

• Pay your bills on time. Recent payment history is more important to potential creditors than payments made several years ago. Maintain a timely bill payment strategy for at least six months to see an improvement in your credit score. The longer your payments are on time, the more your score will improve.

• Reduce your outstanding debt. This doesn’t mean to move the debt to lower interest credit cards; it means to reduce, or payoff, existing revolving credit accounts.

• Reactivate an old credit card to enhance your credit history. Credit history, or how long you have been using credit accounts, plays a role in the overall credit score. If you have an old, open account with no activity, chances are that the creditor is not reporting any information to the credit bureaus. The longer you have been using credit responsibly, the more credit worthy you will seem.

• Use more than one type of credit account. A combination of installment loans (car payments) and revolving credit accounts (credit cards) show your ability to manage different types of credit.

• Stop applying for loans. New credit inquiries (hard pulls) can have an impact on your credit score. A hard pull is when a potential creditor evaluates your credit report for a loan and, in some cases, a savings account. Hard pulls remain on your credit report and can lower your credit score five points for up to six months, according to lendingtree.com. Soft pulls do not affect your credit score; credit card solicitations and some mortgage loan pre-approvals are examples of soft inquiries.