How to Improve Credit Score

When it comes to improving your credit score, there is good news and bad news.

The good news is that improving your score is a very achievable goal. The bad news is that there are no quick or easy fixes. Improving your score requires time, patience and responsibility.

Here are the five components of how numbers are calculated, along with examples of how to improve them in the long term.

How to increase credit scores

Payment history

This is the category that will have the greatest impact on your score. Improving your number in this category is fairly straightforward, but it requires diligence and financial responsibility. Paying your bills on time is extremely important. Collections for overdue bills can have a negative effect on your score. Even after you pay off a collection, it will remain on your credit report for several years to come. You may want to consider setting up an online automatic payment schedule, so that you will not forget to pay your monthly bills. If you have had financial problems in the past, do not be discouraged. As time goes by, older credit problems begin to carry less weight in the calculation of your number. Focus on what you can control now and in the future.



Amount of debt

You can start improving your score in the long term by keeping your account balances low and decreasing your overall level of debt. You should avoid opening new accounts in order to simply move debt around, since it could lower your score.



Length of credit history

If you have a relatively short credit history, avoid opening many new accounts in a short period of time. New accounts can bring down the average age of your accounts. Opening many new accounts very quickly can also make you look like a higher risk, which can lower your score.



New accounts

Plan your future accounts carefully and manage them responsibly. Opening accounts and paying them off in a timely manner will help increase your credit score because it will demonstrate that you are responsible and lower-risk.



Types of accounts

Avoid opening many different types of accounts just to increase the diversity of your credit. Having a diverse credit mix won’t raise your score. It is better to have a few lines of credit and manage them well.