Thread: How do you improve your credit score?

I've heard theories that you can improve your score by paying off credit cards, but is that true?

What else works to raise your score?

Keep your revolving account balances under 30% of your credit limit.

Avoid opening too many revolving accounts. A good rule of thumb is 2 and no more but as long as you pay on time and keep them under 30% of your limit you could do more with little or no impact on your score.

Avoid opening up accounts with finance companies. Beware of some smaller retailers who actually offer same as cash financing. Although you could benefit from no interest the rates they charge are very high if you cannot pay off the balance and they are through a finance company.

The previous paragraph is tricky though. Let's say you do a Best Buy card. That is ok. It is a credit card division of a finance company or bank. It is not considered a finance company account.

Pay more than your minimum payments.

Pay your payments on or before the due date. Sometimes if you pay 5 days early say on the 25th and your payment is due on the 30th you pay 5 days early but then interest is charged from the 25th until your next payment. Let's say you pay that one on the 30th. That is approximately 35 days of interest. Your balance may increase. Increasing balances can negatively affect your score.

Also as you know limit the number of credit inquiries. Track your report and make sure there are no mistakes on it.

That is great advice, Greg. Thank you!