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10 Secret Strategies to Improve Your Credit Score

Credit scores are like the adult equivalent of the report card. It takes work to get a good one, it seems to be hanging invisibly overhead at the most inopportune moments, and when it goes down, it can be very difficult to bring back up -- but, and this is key, not impossible.

credit score

Your credit score will determine whether you're approved for loans, and at what interest rate. Keep yours in good standing by keeping balances low.

Your credit score involves many different facets of your finances: your bill-paying history, how many credit accounts you have, the type of accounts, late payments, outstanding debt, collections, and more. This works in your favor because it means that there are, in fact, quite a few strategies out there that can get your credit score back in that "A" range, and put you among the elite crowd that's offered the lowest interest rates around.

1. Open More Than One Account, But Don't Get Carried Away

Opening too many new credit or charge accounts can negatively affect your score -- it may indicate that you're spending more than you can honestly afford. At the same time, having only one account can make it difficult for creditors to judge your reliability.

2. Keep Your Balances Low

A high credit balance, carried over month to month, indicates that you've charged more than you can handle, financially speaking -- even if you've been making payments. Keep your balances to a minimum, and, ideally, pay them off each month.

3. Don't Reach Your Credit Limit

Your credit-use ratio (total outstanding balance : total credit limits) is one of the ways creditors assess your score. A general rule of thumb is to spend, at most, 30 percent of your credit limits (combined from all your accounts).

4. Check Your Credit Reports

You are entitled by law to one free copy of your credit report each year from each of the major credit reporting bureaus. Review this report at least once a year and have any errors -- such as on-time payments labeled as late -- corrected immediately.

You can order your free credit report at

5. Pay Your Bills on Time

Making late payments can significantly reduce your credit score, particularly if they are recent. Because of this, if you know you will be applying for a loan soon, it's especially imperative to make on-time payments. Accounts sent to collections will also reduce your score.

6. Resist Consolidating Your Debt on to One Card

This may seem like a good idea, but it can actually hurt your score. Your total credit limit will be reduced, which means you're more likely to be spending more than 30 percent of your limit (see #3), and you may be closing accounts that you've had open for awhile, which is a plus for your score that you'd be losing.

credit score

While trying to reduce your balances, only charge absolute necessities, and keep just a small amount of cash on hand to discourage impulse purchases.

7. Reduce Your Balances

This also goes back to your credit-use ratio. The lower your balances, or outstanding debt, the lower your ratio will be relative to your total credit limit. So pay as much as you can each month, and avoid charging items that aren't absolutely necessary until you get your balances under control.

8. If You Must Pay Late, Don't go Past 60 Days

If you cannot pay on time, make the payment as soon as possible thereafter. All lenders report payments that are 60 days overdue, but some do not report payments that are 30 days past due, etc. So pay before that 60-day mark and you might just get lucky.

9. Don't Close Unused Accounts

Again, see #3 and #6. Closing unused accounts will lower your credit limit, probably before you've had a chance to pay down debts on your other accounts.

10. Spread Out Your Charges

While consolidating your debt on to one card is a bad idea, transferring a balance from a nearly maxed out card on to one that's not really used can help your score. Keeping your usage on each card at 20 percent to 30 percent is ideal (rather than charging everything on one card and leaving the others at 0).

Recommended Reading

10 Important Tips You Should Know About Credit Cards to Save Money, Time & Grief

Kids and Money: 5 Keys to Teaching Kids Money Management Skills

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