How to Improve Your credit Score.

May 2, 2012

Some people are afraid of credit cards.  Some people don’t know how to use it properly. There are lots of advantages and disadvantages of using a credit card.  Actually, it depends on the person handling the card.  Having a credit card can be an asset or a liability.  An asset if you pay your bills on time. A liability if you don’t because of its high interest.

What are the 4 ways to improve your credit score?

1.  Pay your bills on time – It has the greatest factor in determining your credit score.  Lenders are concerned if you are going to pay them back on time. Having a good track record of payments in the past means you can be trusted in the future.

How to pay bills on time?

You can use an online reminder using a Google Calendar so that you will not miss any payments every month.  In your computer, you can also use notepad for taking notes digitally.  Or if you want the traditional way, post-it notes or notebooks are available in any bookstores.I use my Moleskin combined with a digital calender.


2.  Keep your credit balances low – Some people may use their credit cards for everyday expenses like for doing groceries.  This is really a bad move because maxing out your credit card is a big minus for your credit scores.  It is recommended to keep a balance below 25% of your credit limit.  For better understanding, if you have a credit limit of $1000, show a balance of $250 only. Obviously have a zero balance is even better.

3.  Review your Credit Report on a Regular Basis – It is really important to review your credit report because any time there will be errors that will hurt your credit score.  These errors might be any of these:  inaccurate or outdated information, outstanding balances, late payments, unusual inquiries, charge-off and bankruptcies.   The best thing to do is to file a claim to dispute and fix any errors with the reporting agency as soon as possible.

I remember there was a time they had an error with my contact number.  It was just a single number though.  Glad I was able to dispute fixed the error.

4.  Don’t Close Old Lines of Credit Account – There is a fine balance between having access to too much credit and not enough. I use the percentage basis. At any given time, the total amount charged on your line of credit/credit card should not be more than 25%.

5.  Don’t open multiple lines of credit cards – Some people may think that opening multiple lines of credit cards will increase their credit scores.  This is not really true because it only affects for having a negative score.  Even a 10% discount when you sign up offered by a credit card is not really worth it. Only take a new one if you only need it. Trust me, I used to try to sell this to people. The interest rates on these cards are ridiculous.



You Might Also Like

  • Modest Money May 2, 2012 at 6:32 pm

    Good tips, but I would have to disagree about the part of using credit cards for everyday expenses being a bad idea. I use my credit card wherever possible because I know I get cash back rebates and extra buyer protection. Then again, I have a fairly high limit. So even by doing this, I don’t come close to 25% of my limit. I do make a point of paying off my card in full each month.

    The problem is that some people just don’t realize the importance of a good credit score until it comes time to try to borrow money. Then they are suddenly scrambling to fix their credit score to avoid high interest rates.

    • Marissa May 3, 2012 at 4:39 am

      I completely agree with you. Most people don’t have the slightest idea about their balance at any given time.

  • From Shopping to Saving May 2, 2012 at 4:58 pm

    These are some great tips for those who want to increase their credit score. I’m not sure how much holding a large balance affects your credit score, because I saw my credit score rise drastically after I paid off and maxed out my credit card. They increased my limit multiple times and were okay with it. My credit score went from the 750s to the 780s, maybe because I paid it all off? Not sure! But these are great tips either way!

    • Marissa May 3, 2012 at 4:41 am

      I think you become less of a risk with you have access to huge limit and don’t need to use it.

  • Katie May 2, 2012 at 11:55 pm

    Transunion dropped my credit score by over 40 points after I paid off my credit cards. I had zero debt on my report so they gave me a “D” in the area of debt to credit ratio. From my experience I would suggest carrying a small balance rather than a zero balance.

    • SB @ One Cent At A Time May 3, 2012 at 2:27 am

      Katie that could have been a software glitch. I don’t carry balance and still see my score climbing up every month. I would suggest calling them up and demanding an explanation.

      • Marissa May 3, 2012 at 4:40 am

        I agree. That seems really odd.

    • Marissa May 3, 2012 at 4:40 am

      Did you check any other credit agencies?

  • Jai Catalano May 3, 2012 at 6:07 pm

    My credit score was great. Was is the operative word. 🙂

    Damn mortgage.

  • TB at BlueCollarWorkman May 3, 2012 at 8:10 pm

    I had no idea about the rule of keeping your credit card balance to below 25% of your limit. Luckily I do that, but I didn’t know that that was important!

    • Marissa May 3, 2012 at 8:27 pm

      Me neither until I talked to my credit card company.

  • Broke Professionals May 3, 2012 at 8:14 pm

    I never realized that the balance/limit ratio on a credit card was so crucial until recently. We’ve always paid our bills on time, so I called our credit card company and asked them to increase our limit so it would look better on our credit score!

    • Marissa May 3, 2012 at 8:27 pm

      I hate carrying a balance now, but Im scared to increase my rates.

  • Guille V.P May 7, 2012 at 10:04 pm

    All you say is true, the unique way to have a good credit score is simple make your payments on time. If you have good credit scores you can solicit to a bank all that you need, for example a loan or something like that.

  • Belinda Ramirez May 16, 2012 at 8:25 am

    Yes, a credit card can definitely be an angel or a devil depending on the one who is in control.
    Just to give your readers an overview, this is how credit score is solved(according to Fair Isaac):
    35% – history on payments
    30% – kind and amount of debt
    15% – length of your credit history
    10% – based on new credits
    10% – various types of credits.
    I hope this helps.


    • Marissa May 16, 2012 at 4:39 pm

      It does. Thanks!

  • RICK CHARLES May 22, 2012 at 3:19 pm

    Great article..I think financial planning, investing and specially in annuities are one of the critical things about retirement.. I bought a few annuities 20 year back from bankers life and casualty , and I can live a worry free retirement.