Having access to a line of credit is usually an important aspect of most people’s finances. In most cases your ability to obtain a loan from a lender is based upon the credit score reported by the major national credit reporting agencies. A poor credit score can keep you from being able to obtain a mortgage or a car loan which can be problematic in your endeavors to build wealth. The good news is there are several actions you can take to improve your credit score. 

Look at your credit reports 

If you can find out what factors are causing your credit score to be not as high as it could be, it would be helpful in your goal of increasing your score. You can do this by requesting your own credit report from the relevant credit reporting agencies. Things on your credit report which may be keeping your score low may include being late or delinquent in paying bills, maintaining high balances on credit cards and creditors winning judgments in court against you. Items which can help your credit score are timely payment of bills, low credit card balances, a variety of different loans and credit card accounts, low number of new credit inquiries and not having too many old credit card accounts. 

Pay your bills promptly 

The factor with the most impact on your credit score is whether or not you pay your bills on time. Therefore, make sure to do whatever it takes to ensure you are not late in paying bills. This may mean utilizing either a digital or paper-based calendaring system to help keep track of due dates. One option may be to use automatic bill payments that will pay the money directly from your bank account without you having to think about it. 

Keep credit utilization low 

Credit utilization is the amount of your available credit you are currently using. A credit utilization of 30% or less is recommended to increase your credit score. It is even better to pay the full balance on your credit cards immediately if possible. One tactic you may want to consider is to ask your credit card provider for an increase in your credit limit which will decrease your credit utilization rate. 

Minimize requests for new credit 

Another way to help your credit score is to minimize the number of times you make requests to open new lines of credit since these requests will go on your record as a “hard inquiry.” A “hard inquiry” is when a potential creditor requests your credit report from the reporting agencies in a response to your application for a new line of credit. A small number of “hard inquiries” is usually not problematic, but it becomes an issue when you have many over a short length of time. 

However, “soft inquiries” will not have any effect on your credit score. These types of inquiries are when you request your own credit score. This may occur as a part of the process for tenant applications or when an employer requires a credit check before hiring you.