If you’ve got a big purchase on the radar, your credit can make or break your eligibility. But whatever your credit score is today doesn’t mean it’s going to be that way for long. There are plenty of ways to boost (or tank) your score, so you will want to monitor it consistently. If you want a high score, there are many approaches to take to hit that healthy credit zone.
Keep Credit Usage in Check
Credit cards are a major component of your overall score, and they can be tricky in the ways they affect your credit.
The biggest impact is your percentage of open credit, and how much of that you use. Let’s say you have three credit cards, each with a $1,000 limit. One is maxed out, another has $500 on it, and the third one does not have a balance. You need to consider your cards as a total, so in this case, you have $3,000 in open credit and are using half of it. The goal for optimal credit is a balance of less than 30 percent on your cards.
This is why closing a credit card can have an immediate negative impact on your score. If you close one of those cards because you don’t use it often, you’re now using a higher percentage of a smaller credit limit. If you have to close a card, you could request higher limits on your other cards or open a new card better suited for you to offset it. But ultimately, not charging too much and paying your bills on time will strengthen your credit.
Make Payments on Time
This is an easily overlooked step that can have serious ramifications on your score. Even the most organized person can miss a payment here and there, so if you’re juggling a dozen different monthly payments, you might want to look into automating your bills as much as possible.
Your payment history makes up 35 percent of your FICO score, so this is key! Take a look at what can be automated and sign up. You’ll be doing yourself and your credit score a favor.
Check Your Credit Score and Report
The most basic way to get a handle on your credit is by checking up on it.
Accessing your score is easier than ever, but numbers remain low: About 46 percent of Americans have checked their credit score sometime within the past year, according to a Bankrate Money Pulse survey. The 18-to-29 age group was particularly concerning, because 38 percent of them have never checked their score. Additionally, 35 percent of Americans have (italicize) never checked their credit report.
Free scores are widely accessible, but ignoring the full report is also a problem. The number itself can only tell you so much, but the full report will help you spot errors, see a detailed overview of your debt and pinpoint your downfalls. Checking your full report annually should be adequate for the average consumer, and checking it year to year gives you solid markers of your progress.
If you’re in the market for a new car or house, your credit is going to play a major role. Simply being aware of your credit, payment history and credit limits will help you boost your score where it’s needed. You can start to see the positive changes on your report in as soon as a month or two, so stick with it and you’ll reap the benefits.