Because of the way credit scores are calculated, some actions you take will increase your credit score better than others. Paying your bills on time and meeting financial responsibilities is one of the most effective ways to increase your credit score. Keeping the amount you owe in the reasonable range and being able to repay it, shows lenders that you are serious about your finances and a good credit risk. 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. An absurdly simple way to show lenders that you take your debts seriously is to develop a history of prompt payments. All lenders want to be paid in full and on time.
Tip#2 – Avoid having too much open credit.
If you have many lines of credit or several huge debts, you make a worse credit risk because you are close to “overextending your credit.” This may indicate that you may be acquiring more credit than you can comfortably repay. By increasing your debt load too much lenders realize that even though you regulary pay existing bills you may be headed for a problem. This type of borrowing 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. If you have a $1000 limit on your credit card and consistently carry a large balance you will be much less attractive as a credit risk than another individual who has a similar card but only carries a small balance such as $100 or there abouts. If you really want to improve your credit score,start by paying down your largest debt first so that you utilize less of your total credit percentage.
Tip #4 – Have a range of credit types
The types of credit you have are a factor in calculating your credit score. Lenders generally want to see that you can hangle a range of different credit types well. Having multiple types of personal credit such as credit cards and a mortgage or car loan is much better than only one type of credit.
This is the absolutely best way to increase your credit score.
