Having a strong credit score can help you in many ways throughout your financial life. Lenders will make decisions on whether or not to lend to you and what terms you receive on your loan based partially on your credit score. In other words, your credit score can make the difference between you being able to obtain a mortgage or car loan or not. Fortunately, there are various things you can do to increase your credit score.

Examine your credit reports

By requesting a copy of your credit report from all three of the national credit bureaus you will be able to see what factors are hurting your credit score and which ones are helping. Things on your credit report that will help are paying bills on time, a mix of different loan and credit card accounts, keeping credit card balances low, minimal new credit inquiries, and older credit accounts. Items that will hurt your credit score include late or delinquent bill payments, collections, judgments against you by creditors, and holding higher balances on your credit card.

Start paying bills on time

Your history of bill payments is the most significant factor in determining your credit score. This means if you have a hard time paying bills on time for one reason or another, you will need to take action to correct this. You will need some type of filing system which could be either digital or paper to help with keeping track of your bills. Using due date alerts on your calendar is one way to make sure you are aware of bills you need to pay. You can also automate your bill payments to go directly from your bank account.

Try to use only 30% or less of your available credit

The proportion of your available credit limit that you are using, referred to as credit utilization, is the next most significant factor in how your credit score is calculated. It is recommended to keep your credit utilization to 30% or lower. If possible, try to pay off your entire balance owed right away. Another way to reduce your credit utilization is to request for an increase in your credit limit from your credit card company.

Limit new credit requests

You should do your best to avoid requesting new lines of credit as much as possible. When a creditor pulls your credit report for purposes of reviewing your request for a new line of credit, it is known as a “hard” inquiry. The more “hard” inquiries your credit report records the more likely your credit score will be lower. A few of them on occasion is usually not a problem but it becomes an issue when you have many “hard” inquiries over a short period of time.

On the other hand, “soft” inquiries are when your credit report is pulled for reasons other than requesting a new line of credit. This may include actions such as checking your own credit score

or allowing your potential employer or landlord to check your credit score. These “soft” inquiries have no effect on your credit score.

Ask a financial advisor about improving your credit score

These are just a few actions you can take to increase your credit score. A professional financial advisor can provide even more techniques and strategies to help your credit score improve. Also, a financial advisor can help you with budgeting, estate planning, investments, and many other aspects of your personal finances.

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of the author and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice.