Your credit score is a number you need to know. This score is a numeric representation of your ability to pay your bills on time and maintain good credit use. Lenders of all types, some employers, insurance companies and others use this score to determine how trustworthy and reliable you are. It pays to do your best to ensure it is the highest it can be.

First, Know Where It Stands Now

There are several steps to take here. First, get a free copy of your credit report, the file used to create your score. You can do this through www.AnnualCreditReport.com. There are no fees or sign ups required. Verify the information on your report is accurate. And, if not, file a complaint with the reporting agency (Equifax, TransUnion, or Experian).

Now, How Do You Improve It?

Your FICO score, the most commonly used credit scoring tool, breaks down specifically what factors influence your number. The scale ranges from 300 to 850. The higher the number is, the more credit-responsible you are. Lenders, such as the credit union, establish what is considered a "good score," not FICO itself. However, typically, credit scores over 700 are considered good.

Now that you're ready to boost your score take these three steps to make it happen.

#1: Pay Your Bills on Time Every Time

Most of your score is related to your ability to pay your bills on time. This is by far the most important component of your score make-up. If you pay late, it’s on your report for seven years. To help make this possible, consider these tips:

• Set up automatic payments whenever possible for any credit card or loan you have. This ensures your payments are always on time.

• If you're behind or going to be behind, contact your lender immediately. This may help them rework your debt to help you make payments on time.

#2: Work to Pay Down Your Debt

Reducing the amount of debt you have is always a good thing – and it saves you money. Your goal is to reach a debt-to-credit limit ratio that is under 30%. This means you're using less than 30% of the available credit.

• Always pay more than the minimum on your balances. In some cases, paying the minimum can stretch out even a small debt over ten years or longer.

• Pick a credit card with the highest interest rate. Pay as much as possible every month on that card until it paid off. Then, move to the next one.

• Set up an account that allows you to automatically move a portion of your paycheck to a separate account designated to paying down your debt.

#3: Use Credit

You can't build your credit history without using credit. Just, do it wisely.

• Open a low-interest credit card to start establishing your credit history.

• Make small purchases (such as gas for your car) on that credit card. Pay them off in full every month.

• Obtain other loans, aside from credit cards, to build your score. Options include car and home loans.

Overall, it is possible to improve your credit score by using smart money management strategies. The key here is to work to build your credit consistently using these strategies.

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Sources:

Stratix

https://www.greenpath.com/monitor-and-improve-credit/

https://www.greenpath.com/counseling/credit-report/