By Contributing Author
Building a strong credit report and glowing credit score isn’t rocket science, but it does take a little bit of know-how and hard work. Some tips are obvious, while others seem like insider secrets. Even though your credit score is a mix of several factors, there are plenty of resources available that let your check your credit score and explain how to keep your numbers in the good to excellent range. Want to know the secrets? Check out these tips for building good credit.
1. Make Extra Payments
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Part of your credit score is factored through credit utilization. This is the amount of credit that you have used against how much the lender has extended to you. In order to move the needle on utilization in your favor, you should strive to make extra payments each month on your account balances. This is often a lot easier with credit card payments, as often the minimum payment amount barely covers the interest charges. These payments, called micropayments, help keep your balance lower while pushing your credit score up.
2. Make Timely Payments
This cannot be overstated. Payment history is the primary factor of a credit score, and just one missed payment could drop your score as much as 100 points. This is a devastating mark that takes a while to roll off. If you know you won’t be able to make the payment, call your creditor right away to see what can be worked out. There may be options to extend the payment deadline or the lender may be able to split one large amount into several smaller. Don’t take a chance and ignore the bill. Always contact the lender to make some arrangements.
3. Make Noise Over Errors
There are several ways to check credit score or history for free, and you should do this at least once a year. You may find that there are negative comments or errors on the report that are driving down your score. You can—and should—dispute what you find with the creditor. You may have never been credited for a payment you made, and now your report is showing a late mark. Supply the proof of the payment to the credit bureau. The credit bureau has 30 days to find out more information and resolve the dispute. Once the mistake has been taken off, your credit will improve.
4. Make Requests for More Credit
If you have your credit cards or other credit accounts under control, you can improve your credit score by asking your lenders for a higher credit limit. Even if you don’t need the credit and don’t intend to use it, a higher limit with a low balance improves your credit utilization score. If you have had several years of good credit experience or you have had an income adjustment where you are bringing in more money, you may be approved for more credit. However, make sure the lender doesn’t do a hard credit inquiry, as this could drop your score a few points in the process.
5. Make Friends With Someone Else’s Credit
If you have a friend or family with great credit, being added as an authorized user to one of their cards with a high credit limit can boost your credit score. You don’t have to use the card at all (it is probably best if you don’t), as just the act of being added as a user can beef up your credit file and lower your personal utilization number.
These five tips can easily raise your score by 100 points if you stay on top of your credit behaviors. Building good credit opens up lower rates and better lending terms when you need to borrow money.